What is the initial price setting in a penetration pricing strategy?

In a penetration pricing strategy, the initial price setting is low to enter the market. This approach is designed to attract a large number of customers quickly by making the product or service more accessible. The low price point helps to stimulate demand and can disrupt existing competitors by encouraging customers to switch to the new offering.

By starting with a lower price, businesses aim to establish market share and build brand loyalty before potentially raising prices later. This strategy is particularly effective in markets where price sensitivity is high or where there are many competing products. It plays a critical role in growing the customer base quickly and securing a foothold in the market.