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There are three types of pricing strategies which include cost based pricing, competitive based pricing and customer based pricing. In the cost based pricing, cost per unit of the product is calculated and then a small profit is earned per unit. In the competitive based pricing, the prices are charges according to the prices of the substitutes available in the market. However, this pricing strategy is not successful because it ignores the costs incurred by the companies. Thirdly, there is customer based pricing which is decided in consideration to the reservation price demanded by the customers. Some other types of pricing includes skimming price and penetration pricing strategy. In skimming pricing the companies want to earn higher profits and to quit from the market while in the penetration pricing, low prices are charged to make a visible position in the market.
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