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How to Price a Product: Different methods of pricing a product


Cue to Quality Pricing

Cue to quality pricing is technique companies use to make customers perceive their price offers the best value in the industry. The value of that price beats the competitor's past, current, and future prices. However, the definition also includes working with the customer's psychology to force a demand through selling value (Campbell, 2020).

A brief example and my instance

An example of a cue to quality is a customer who walks into a supermarket and finds a product with the label 'On Sale.' Similarly, another example is when a hungry customer spots a billboard hamburger picture on offer, the customer might feel obliged to alight and make a purchase from the hotel. That's how I was forced to buy a hamburger from the hotel as I was driving on a highway.

What the company was trying to achieve

The company was intending to drive high sales by exploiting my existing need. It was looking for those who have missed eating a hamburger or angry and playing with their psychology that I'll find it cheaper if I bought the product there.

Overall effect

In the short run, the company could make sales as much as possible. However, the tactic is unmaintainable because it requires the hotel to maintain a relatively lower price than the competitor to get sales continuously. Moreover, the psychological impact would diminish once customers realize the product is ever on sale; thus, in the long run, it hurt the company.



Price, legal, and ethical adjustment considerations

It could be unethical to provide a notion that the price is lower when it is not; according to Haws, McFerran, & Redden (2017), customers' are poor in price knowledge to increase them in the future. However, to maintain the customers and it's good to consider maintaining the same price on offer. For instance, Walmart sells its product lower than the competition and works around other ways to balance its books.

Contextual frame pricing

Contextual frame pricing indicates how customers get influenced by comparison points but not the actual price level. The customer can buy a product at a higher price in a managed context than he would have done in another context.

A brief example and my instance

An example of contextual frame pricing is that customers can accept to buy beer at a slightly higher price when they are at a ball game. In my instance, I've been forced to buy ice cream from a salesperson who walks around with them during summer at the double the price in winter.

What the company was trying to achieve

The company was trying to achieve more sales during the summer. It created various contexts that influenced prices ultimately. During winter, fewer people would buy ice creams, while during summer, people would buy; therefore, they increase the prices cover-up for the fall in winter.

Overall effect

The company ensured there is continuity. In the summer, the company ensured they sold at more prices to offset the winter deficit when prices are low. This gives the ability always to operate and drive sales. For instance, going for a median price throughout the seasons, the company would not maximize sales during summer.

Price, legal, and ethical adjustment considerations

It could be unethical that the company operates at low prices in the winter to increase their prices during the summer to balance their books. Therefore, ethically it would be prudent to maintain a standard price. The company could as well consider selling at relatively fair prices during summer instead of double.

Compromise effect pricing

Compromise effect pricing suggests that customers choose products with median prices. They don't go for the extremes, the lowest or the highest-priced products.

A brief example and my instance

An example is the buyer might be concerned about the price and would like the lowest. Unfortunately, he considers the lowest priced as the worst product and the highest prices as the best. In my instance, when I went to buy my first motorcycle, the lowest priced ones lack some features, such as an electromagnetic trigger. I, therefore, decided to median-priced bikes with median pricing.

What the company was trying to achieve

By having motorcycles that fall in middle-class categories, the company tried to achieve more market share. Some companies this is the ideal way of surviving (Libraries).



Overall effect

The company ensured they served all classes of society who are interested in bikes. Thus it capture more markets in the long run.


Price, legal, and ethical adjustment considerations

The company did not overprice or underprice to cause an undue effect on the competitors and customers. Therefore, it should consider maintaining.




Haws, K. L., McFerran, B., & Redden, J. P. (2017). The satiating effect of pricing: The influence of price on enjoyment over time. Journal of Consumer Psychology27(3), 341-346.

Libraries. 15.1 The Pricing Framework and a Firm’s Pricing Objectives.








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