Penetration pricing is used to acquire new customers by pricing a product or service significantly lower than a competitor. The goal of penetration pricing is to offer a discount upfront in exchange for awareness, market share, and ultimately the customer’s willingness to spend more money in the future.
A recent example of using penetration pricing was the successful launch of Disney+, which was priced aggressively lower than rival streaming services, including Netflix, Hulu, and YouTube TV. But penetration pricing isn’t just for multi-billion-dollar corporations; it’s used everywhere, from ecommerce platforms to your local grocery store.
In this article, we’ll break down some examples of penetration pricing and explore whether it’s an advanced pricing strategy that your business could use to increase sales volume.