Penetration pricing is a strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The benefits include quick market penetration and the potential to increase sales volume. However, it may result in an initial loss of income for the business. Also, there's a risk that the product may be perceived as low quality.
Freemium Conversion is a pricing strategy where a basic product or service is provided free of charge, but money is charged for proprietary features, functionality, or virtual goods. The benefits include the potential to attract a large user base and convert a portion to paying customers. However, it can be challenging to convert enough free users to paying customers to sustain the business.
Need to improve your product pricing to maximize your profit margin? This Pricing Strategies Toolbox...
Download template