Captive Product Pricing
Captive Product Pricing Examples
- Printers and ink cartridges
- A single serving coffee machine and coffee capsules
Captive products are strategically used to maximize revenue. Sellers generally follow a product-mix pricing strategy when pricing captive products. Low price are offered for the core product, but high prices are placed on captive products. This attracts customers to the core product with a low price but allows sellers to make a profit off the captive products, which are necessary to use the product. Captive pricing must be done carefully, for the pricing of a core product could affective the value of a captive product, and vice versa.
Captive pricing is often used by companies that have perishable product attachments, like ink for printers. At some point you will use up the initial amount included in the core product, allowing you to buy more of the accessory product (hopefully from the original company).