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What is the difference between product line pricing and complimentary pricing?
I have watched your lecture with the example of razors – cheap (loss making) handles with expensive blades that need to be replaced. I understand that this is complimentary pricing?
They are almost the same thing.
However, strictly the razors example is complimentary pricing.
To try and explain product-line pricing, Apple have introduced the Apple Watch. However, there are different models of the same watch – some sold at a lower price, and some sold at a higher price. They can justify selling some models at a higher price because they have maybe better screens or better straps or bigger memories. So it is where there are several different models of the same product, which are sold at different prices.
Ok, thanks for the explanation. In some notes that I have it says:
Product-line pricing – prices reflect cost proportions or demand relationships
Can you please let me know if this is right and what it means?
It is a fancy way of writing what I wrote in my example before.
The price for each model of watch depends on the costs involved and the effect of the price on the demand for each model.
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