When a primary product is offered with different features or benefits, essentially creating multiple “different” products or services, it’s called Product Line Pricing. The goal of product line pricing is to maximize profits. Think of a car, for example, which could be the primary product. It could come standard, with a sunroof and navigation system or fully stocked with all the features and add-ons. Each product after would then be priced accordingly. The more features offered, the more consumers will pay. The aim is to draw enough interest in the primary product that the upgraded product will be sold (at a greater price) based on the interest in the “basic” primary product. By using Product Line Pricing, some individual products may not make profits, but the intent is for the product line as a whole to turn a profit.
Here’s what Warren Buffet, an American business magnate, investor, and philanthropist, has to say:
WHAT DO YOU THINK?
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In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.