Today we’ll talk about how companies determine the initial prices for their products. Uh, by that I mean when they first introduce the products in the market. There’re different approaches and today we’ll discuss two of them. They’re quite different, each with their own advantages.
One approach, or strategy, sets the initial price of the product high followed by a lower price at a later stage. Why? Well, when introducing a new product, companies want to build a high quality image for it. Products that cost more are believed to be of higher quality.