Setting the correct price is very important. The correct price will ensure that we can cover all costs. At the same time, the correct price can help to generate sales.
Different price strategies can be utilised at different stages of the product life cycle. Some of these price strategies may include (1) penetration pricing, (2) fair/parity pricing, (3) skimming price, and (4) Cost-plus pricing. For example, penetration pricing can be used by offering really attractive prices at stage of product launch, in order to capture market share. At a later time, once the market share is stable, a company could consider cost-plus pricing, where it marks up the price based on the cost, in order to ensure profit.