Pricing strategies are determined by factors like market conditions, consumer demand, and your cost of goods sold

Example: A new cafe opens up in town and offers coffee that is 40% cheaper than any other cafe in the area.

2. Skimming pricing

Businesses that charge maximum prices for new products and gradually reduce the price over time follow a skimming strategy. Prices drop as products end their life cycle and become less relevant. Businesses that sell high-tech or novelty products typically use price skimming.
Pro: You can maximize profits of new products and make up for production costs.
Con: Customers may become frustrated that they purchased at a higher price and watch as the price gradually declines.
Example: A home entertainment store starts selling the latest, most advanced television well above market price. Prices then gradually decrease over the year as newer products come to market.

3. High-low pricing

High-low pricing is similar to skimming, except the price drops at a different rate. With the high-low pricing method, the price of a product drops significantly all at once rather than at a gradual pace. Retail businesses that sell seasonal products typically use a high-low strategy.
Pro: You can rid your inventory of out-of-date products by discounting them and putting them on clearance.
Con: Customers may wait for impending sales rather than purchasing at full price.