What Is High–Low Pricing?

How Does High-Low Pricing Work? The essence of high-low pricing lies in its cyclical nature. Retailers start by offering products at higher price points, known as reference prices. Over time, these prices are reduced during sales events, creating a sense of urgency and excitement among consumers.

This strategy leverages the psychological appeal of getting a good deal, which can drive significant traffic to stores and websites. For instance, companies like Macy’s and Kohl’s are notable examples of retailers that use high-low pricing strategies.

They frequently offer substantial discounts during sales events, making their products more attractive to price-sensitive customers. Similarly, brands like Nike, Reebok, and Adidas employ this strategy to clear out old stock and make room for new arrivals.

Advantages of High-Low Pricing Increased Store Traffic: Promotions and sales events attract more customers, increasing foot traffic and online visits. This can lead to additional sales on other items not currently on promotion…