The Price pyramid visually represents the sales share (value volume) of the Category by Price Segment. These price segments can be the same as defined in the Price Structure or different.
The key benefit of the Price pyramid is to identify around what Selling Price level most of the Shoppers are buying the Product. It also helps identify the level of choice (and therefore competition) in every price segment.
🧪 Example of Price Pyramid
❓What is used for
- To improve profitability: Pyramid pricing is a simple way to determine your product price and improve profitability. So your profit will increase if you price strategically.
- To minimize erosion and maximize profits over time: Pyramid pricing is combined to form a strategic pricing pyramid for a deep understanding of how products create value for our customers. So, it is the key to improving the price structure that determines how your offerings should be priced.
- To discover what consumers value about your product: Discovering this can allow a Retailer to increase the price of products.
- To avoid price wars from multiple competitors: Sometimes there are multiple competitors who produce the same product at the same price as you. The only way to compete is to offer a discount or some promotion. Pyramid pricing might be the key to avoiding price wars.