What are some successful examples of penetration pricing?

What are some successful examples of penetration pricing?

Penetration pricing is a strategy where a product is introduced at a low price to attract customers. A notable example is Netflix, which initially offered low subscription rates to gain market share.

How did Netflix's strategy impact its growth?

Netflix's low initial pricing helped it rapidly acquire subscribers, allowing it to invest in content and technology, ultimately leading to its dominance in the streaming market.

Are there other companies that used this strategy?

Yes, companies like Spotify and Uber also used penetration pricing. Spotify offered free trials and low subscription fees to attract users, while Uber provided discounts to gain riders in new markets.

What are the risks of penetration pricing?

The main risks include potential losses if the pricing is too low, difficulty raising prices later, and attracting price-sensitive customers who may leave for cheaper alternatives.