A merchandising strategy where products or services are offered for sale at a limited number of predetermined price points. Instead of having a continuous spectrum of prices, a retailer establishes a few distinct price levels. For example, a clothing store might sell all its jeans at $40, $60, or $80, regardless of minor differences in cost or features. This simplifies the purchasing decision for consumers and streamlines inventory management for the retailer.
The practice enhances operational efficiency by reducing the complexity of pricing decisions and allowing for easier price comparisons by customers. This streamlined approach can lead to increased sales volume, simplified marketing efforts, and a clearer perception of value for shoppers. Historically, it gained popularity as a means to simplify retail operations and cater to consumers’ preferences for straightforward pricing structures.
