They started with very low subscription fees, gradually raising the prices. This is mostly thanks to their good service and the smart implementation of the penetration pricing strategy. Today, they have 51% of streaming subscriptions in the USA.

and 20 years later, they introduced their streaming service. They are a great example of penetration pricing done right. This is a practice in different industries, from food and beverages, where you can find examples from Costco and Kroger implementing the penetration pricing for organic products to streaming services, where Netflix is a perfect example of good practice.

Oftentimes utilized by big companies, as they can afford prices barely above the profit margin. You can already guess that it is usually used when a company is trying to enter a new market or push out competitors from the market. Penetration Pricing Strategy ExamplesĪs we already said, penetration pricing is the common way of setting the prices and bearing in mind the rationale behind it. While penetration pricing requires starting with the lowest price possible and eventually raising the price after reaching the goal, the price skimming strategy consists of starting with a higher price and lowering it over time.Īs this pricing strategy requires frequent price adjustments, it is necessary to consider investing in dynamic pricing. Penetration pricing should not be considered with the price skimming technique, as those two are opposite.

and even to drive competitors out of the market.

try to generate a significant demand to utilize economies of scale.

In this pricing strategy, businesses try to take over customers by picking a price point on (or barely above) the profit margin. Penetration pricing is a pricing strategy businesses implement to gain market share by offering a lower price for a product or service.

Minimum Advertised Price (MAP monitoring).

Market penetration pricing strategy