Introductory Price: What Is It and How to Use It to Your Advantage?

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Picture this: you’re browsing the web, stumbling upon yet another streaming service’s subscription offer to reduce the rate for your preferred subscription option if you apply for 3 months. And what’s that? A special “introductory price” tag gleaming like a beacon of savings.

But what exactly does it mean, and how, from a business’s perspective, can you make the most of this seemingly too-good-to-be-true offer?

In this article, we dive into the world of introductory pricing, discussing its purpose, benefits, and strategies for both consumers and businesses alike.

Key Takeaways

  • Introductory pricing is an effective strategy for attracting customers and building brand awareness during a product’s initial launch phase.
  • Striking the right balance between a low introductory price and profitability is crucial to the success of this strategy.
  • Crafting a successful introductory pricing strategy involves understanding your target market, analyzing competitors, and planning for a smooth transition to regular pricing.
  • Avoid common mistakes, such as setting prices too low or neglecting customer retention strategies, to maximize the benefits of introductory pricing.

The Concept of Introductory Pricing Strategy

A well-executed introductory pricing strategy can make all the difference for a business launching a new product or service.

This approach involves offering a reduced price during the initial phase of the launch, creating a sense of urgency and excitement around the product. By providing an enticing incentive for potential customers to try the product, businesses aim to penetrate the market swiftly, outshine their competitors, and establish customer loyalty from the get-go.

This strategic decision, however, requires careful consideration and planning.

The key lies in striking the perfect balance when determining the introductory price. Offering a price low enough to generate interest and draw attention to the product is crucial; however, it shouldn’t be so low that it devalues the product or has a detrimental effect on profit margins.

This delicate balance is vital as it ensures both short-term gains in customer attraction and long-term success in maintaining brand image and profitability.

It’s important to note that setting an introductory price isn’t a one-size-fits-all solution. Companies need to evaluate various factors, such as target audience, production costs, and competitor pricing, before arriving at an optimal price point.

Furthermore, businesses should also identify a suitable duration for this promotional period – one that allows ample time for customers to discover and try the product but doesn’t stretch so long that it loses its appeal or creates an unsustainable financial burden on the company.

Introductory Price vs. Other Pricing Strategies: Comparison

Selecting the most effective pricing strategy is fundamental to a product’s success. While introductory pricing has its advantages, it’s essential to compare it to other popular pricing strategies to determine the best fit for your business.

Below, we’ll explore how introductory pricing stacks up against three other common approaches – penetration pricing, skimming pricing, and value-based pricing.

Penetration Pricing

Introductory pricing involves launching a new product at a temporarily reduced price to attract customers and build brand awareness. Penetration pricing, on the other hand, sets a low price permanently to capture market share and quickly reach as many customers as possible.

While both strategies aim to attract customers with lower prices, introductory pricing is short-term and shifts to regular prices after the promotion, while penetration pricing maintains its low price point over a more extended period.

Skimming Pricing Strategy

Skimming pricing is the opposite of introductory pricing in that it involves setting a high introductory price for a new product during its initial launch phase.

This strategy targets consumers who are willing to pay a premium for being early adopters or for owning exclusive products. Over time, as demand from this segment decreases or competition increases, companies gradually lower the price.

Unlike introductory pricing, which focuses on attracting a larger customer base through lower initial prices, price skimming aims to maximize profits by targeting high-paying customers first.

Value-Based Pricing Strategy

Value-based pricing sets prices according to the perceived value of a product or service in the eyes of consumers. Businesses that adopt this strategy conduct extensive market research to understand what their target customers are willing to pay and tailor their prices accordingly.

This approach contrasts with the introductory strategy in that it doesn’t rely on low introductory prices, temporary discounts, or changing price points; instead, it focuses on offering consistent value that aligns with customer expectations.

As you can see, introductory pricing works in direct opposition to the basic law of supply and demand. However, while it can be an effective strategy to generate interest and build initial customer loyalty, it’s crucial to consider other pricing approaches that may be more suitable for your specific product or market.

By understanding and comparing the nuances of various pricing strategies, businesses can make informed decisions that best align with their goals and ensure long-term success.

Want to get set up with competitor monitoring, price tracking and even more?

Book a free demo to monitor any e-commerce competitor pricing and get instant info of important price movements and more!

Benefits for Consumers

For consumers, an introductory price presents an opportunity to try out something new without breaking the bank. This special price allows them to explore different options and discover products they might not have considered at their regular prices.

sale tags

If they find something they love, they can continue paying for it even after the price increase – knowing they’ve gotten a great deal. Moreover, if the product doesn’t live up to their expectations, they won’t feel as disappointed since they didn’t spend as much money as they would at full price.

Essentially, it’s a low-risk way for consumers to dabble in new products and services.

Pros and Cons for Businesses

When it comes time for businesses to implement an introductory pricing strategy, it’s crucial for them to weigh its pros and cons.


  • Increased Brand Awareness and Consumer Interest. One of the most significant advantages of offering an attractive introductory price is the ability to generate buzz around a new product. This heightened interest often leads to increased sales and revenue during the initial launch phase, as customers are more likely to choose your product over competitors’ offerings.
  • Valuable Feedback from Early Adopters. Introductory pricing allows businesses to gather essential feedback from those who try their products first – a new customer audience. These consumers can provide valuable insights into areas for improvement, potential marketing strategies, or even new market opportunities. This feedback can be instrumental in shaping the product’s future trajectory and ensuring long-term success.


  • Profit Margin Concerns. One potential downside of introductory pricing is its impact on profit margins. By reducing the price during the promotional period, businesses may experience lost profit more than they would at regular prices. It’s essential to carefully assess the duration and depth of the price reduction to strike a balance between attracting customers and maintaining profitability.
  • Risk of Devaluing the Product. Another concern when using introductory pricing is the possibility of inadvertently devaluing your product in consumers’ eyes. If customers perceive that the initial low price reflects poor quality, it could harm your brand reputation and make it challenging to transition to regular pricing later on.
  • Customer Acquisition vs. Retention. While introductory pricing can help attract new customers, retaining them after the promotional period ends can be challenging. Companies must develop strategies to maintain both new and existing customers once prices return to normal, such as providing exceptional customer service or introducing loyalty programs.

By carefully considering the pros and cons of introductory pricing, businesses can develop strategies that capitalize on its benefits and mitigate potential risks. Ultimately, this will lead to a more successful product launch and a stronger foothold in the market.

Crafting a Winning Introductory Pricing Strategy

Creating an effective introductory pricing strategy requires careful planning and a thorough understanding of your target market, product positioning, and competition. Here are several key considerations and steps to follow when designing a successful introductory pricing strategy:

  1. Understand Your Target Market. It’s essential to research and understand your target audience’s preferences, needs, and expectations. Identify the factors that drive their purchasing decisions, such as quality, convenience, or affordability.
  2. Analyze Competitors’ Pricing Strategies. Examine the pricing strategies of your competitors, especially those with similar products or services. Take note of their introductory prices, promotional periods, and any additional offers they provide.
  3. Determine Your Price Point. Based on your market research and competitor analysis, you can determine your pricing thresholds and choose an introductory price that balances customer appeal and profitability.
  4. Set a Promotional Period. The length should be sufficient for customers to discover and try your product but not so long that it loses its appeal or becomes financially unsustainable for your business.
  5. Plan for the Transition to Regular Pricing. This may involve offering loyalty programs, exclusive discounts, or personalized offers to encourage customers to continue purchasing your product even at higher prices.

Common Mistakes to Avoid

Companies that implement introductory pricing strategies should be wary of certain pitfalls:

  1. Setting Prices Too Low. One common mistake businesses make when implementing an introductory pricing strategy is setting the price too low. While a low price may attract attention, it can also lead to lost profits and create a perception of low quality among consumers. Instead, find a balance where the price is attractive enough to generate interest but not so low that it undermines the product’s value or negatively affects profit margins.
  2. Inadequate Communication of Promotion Duration. Miscommunication or lack of clarity regarding the promotional period can lead to customer dissatisfaction when prices inevitably rise. To prevent this issue, ensure that all marketing materials and communications emphasize the temporary nature of the offer and provide clear information about when regular pricing will take effect. This creates a sense of urgency that encourages customers to take advantage of the deal while it lasts.
  3. Neglecting Customer Retention Strategies. Attracting customers with an enticing initial price is the first step; retaining them once the promotion ends is crucial for long-term success. Developing loyalty programs or offering exclusive discounts can help encourage customers to continue purchasing your product at its regular price, fostering lasting relationships with your brand.

How Brandly360 Can Help You?

Brandly360 offers a powerful suite of tools designed to support businesses in staying competitive and making well-informed strategic decisions. We’re an innovative platform designed to assist businesses in optimizing their marketing and sales efforts by providing them with valuable insights into their competitive landscape.

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For instance, by leveraging Brandly360’s advanced tools for cross-sell tracking and promo & sales monitoring, you will not only expedite your competitive market research process but also refine your overall competitors monitoring strategies.

As a result, you can ensure that all your strategic decisions are firmly grounded in data-driven accuracy.

Want to get set up with competitor monitoring, price tracking and even more?

Book a free demo to monitor any e-commerce competitor pricing and get instant info of important price movements and more!

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