What Is a Product Line Pricing Strategy?
Pricing is one of the most important elements of the marketing mix and has the most effect on whether or not the strategy is successful. Product line pricing (PLP) is a pricing strategy used to sell different products in the same product range at different price points based on features or benefits.
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When to use Product Line Pricing
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Product line pricing is used when a primary product is offered with different features or benefits, essentially creating multiple "different" products or services. For example, a car 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 would then be priced accordingly.
Goal of Product Line Pricing
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The goal of product line pricing is to maximize profits. The more features offered, the more consumers will pay. The goal is to draw enough interest in the primary product that the upgraded product will be sold (at a greater price) based off the interest in the "basic" primary product. By using PLP, some individual products may not make profits, but the goal is for the product line as a whole to turn a profit.
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Common Examples of Product Line Pricing
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Car wash options are common examples of product line pricing. Product line pricing is seen from gas pumps to car dealerships and from ice cream shops to fast food restaurants. A basic car wash may be shown as one price, a super wash with wash and wax will cost a little more, and a full-service premium wash will be the most expensive.
Factors Involved in PLP
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The biggest factor in the success of product line pricing is the success of the primary product. A customer won't get his ice cream cone upgraded to have sprinkles and whipped cream unless he enjoyed the ice cream itself. Products must also be priced correctly. One product in the line cannot be too much more money than the others, or it will not adhere to the pricing plan.
Specific Types of Product Line Pricing Plans
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Specific types of product line pricing strategies include optional-feature pricing (as with cars), and two-part pricing, which could be an amusement park that charges for general admission but then also charges for particular rides. Product bundling is pricing a product so that if a product is bought with all available features it would be cheaper then buying accessories or feature upgrades individually.
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References
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