Captive Product Pricing Example

Captive product pricing is a marketing and profit incremental strategy. Captive pricing must be done carefully for the pricing of a core product could affective the value of a captive product and vice versa.

What Is Captive Product Pricing Definition Examples Faq Airfocus

Often companies set a low price for the core product and rely on consistent income.

. The captive product scheme is pervasive in retail businesses because the complementary items exponentially cover the smaller profit margin from the base product. For example the cell phone itself is the core product. Razors Customers may notice that even buying a razor requires multiple purchases.

Captive pricing happens when an accessory product is necessary to purchase in order to use a core product. Captive product pricing comes under product line pricing. Captive product pricing definition.

The Captive Product Pricing strategy attracts consumers with a reasonably priced core product creates a lock-in and makes them buy captive products multiple times over the lifetime of the core product because essentially the core product wouldnt work without the captive product. Razors are a great example of captive product pricing because there is the base product the razor handle and the cartridges the captive. Considering the price of each cartridge to be 5 the razor costs only 2.

You have likely used a razor at one point or another to shave some part of your body. On the other hand a pack of blades containing two cartridges costs around 12. Examples of captive products include camera film computer software razor blades and video games.

On the other hand the captive products are given higher price rates to make up for the low prices of the main item. For instance I recently sold an Xbox 360 for 300 and I got free shipping for the sale. 3 Real-Life Examples of Captive Product Pricing.

Manufactures of the major products mostly price them less and determine. Examples of Captive Product Pricing in the Real World. Real-World Examples of the Pricing Strategy.

The other four include product line pricing optional product pricing by-product pricing and product-bundle pricing. The captive product pricing strategy is developed in two steps taking into account both the core product and the captive products too. This attracts customers to the core product with a low price but allows sellers to make a profit off the captive products which are necessary to use the product.

Captive Pricing Example. Some common examples of captive pricing include-1. A common example of a product with captive pricing is the printer because you purchase ink cartridges to allow the printer to keep functioning.

This is also called by-product pricing. Captive pricing is often used by companies. Hence the manufacturer enjoy greater profit margins when they sell the cartridge which is the captive product.

Captive products are. On the one hand the core product considered the essential item is priced more affordably to attract more buyers. Captive product pricing is used in case when business organizations manufacture products that must be utilized along with the major products.

How does captive pricing work. Certainly if you have a cell phone with a wireless plan youve experienced the captive product pricing strategy firsthand. The captive pricing model can work if your product is a big budget item and you are willing to spend money on the buyer.

The captive product scheme is pervasive in retail businesses because the complementary items exponentially cover the smaller profit margin from the base product. What is captive product pricing example. Some common examples of captive pricing include-1.

Lets take a moment to look at a few examples of captive product pricing. Classic examples of this include products like razor blades for razors and toner cartridges for printers. Razors Customers may notice that even buying a razor requires multiple purchases.

The pricing of both the core and the captive products can vary depending on your specific pricing and income goals. Examples of Captive Product Pricing in the Real World. For example a Razor handle and a blade costs 7.

Examples of Captive Product Pricing. In this pricing strategy you sell a core product at a low price and the essential accessories are sold at a high price to support the profit margins.

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