Pricing Strategy Across a Product Life Cycle

Pricing Strategy Across a Product Life Cycle

A product life cycle encompasses the time it takes to develop and introduce the product to the market until it’s no longer produced and sold to consumers. Primarily, it is divided into 4 stages – the introduction stage, growth stage, maturity stage, and decline stage.

As much as the life cycle concept is mainly used for a product category, it may also apply to a brand. For example, the duration could last for only a couple of months for fad items like fashion apparel, fresh foods, and electronic devices. In other scenarios, it might last a century or even more, like in the case of gasoline vehicles and the Coca-Cola drink.

Knowing where a product is on the life cycle stage can help businesses make better pricing decisions, predict profitability, manage sales and compete effectively against rivals. Moreover, better pricing decisions and strategies help entice buyers to choose a product or brand over all others in the market time and time again.

Pricing Strategies for the Different Product Life Cycle Stages

Pricing variation for the introduction stage

The introduction stage is when consumers are just learning about your product or service. If your offering is unique with no close alternative in the market, you might be able to fix your prices high. However, this should be done after conducting the necessary market analysis and by pricing experts who have adequate knowledge of your niche.

The reason for this is because when your premium pricing is not commensurate with the value or uniqueness of your product, it might cause low sales. Customers would think you’re overpriced and wouldn’t even try out your product.

On the flip side, if there are other well-established brands in your product category, you might want to start with lower-than-average pricing. Again, the idea is to attract consumers to give your product a try so they could see how it made their life so much better than what your rivals are offering.

However, in a bid to draw in more customers, if your prices are set too low, that may be a huge turn-off to customers. To some customers, low prices may indicate poor quality.

Therefore, when setting prices at this stage, you need to have a good understanding of the current market situation, your targeted customers as well as your niche.

Pricing variation for the growth stage

At the growth phase, you’re no longer a newcomer in the market. Customers now have a good understanding of what value your product will offer them, and there is high demand and lots of sales.

It is at this stage that businesses aim to generate enough revenue to recoup their initial investments and costly marketing expenses of the early days. So, products are priced higher.

While the growth phase might be profitable, it is also that phase where competitors start showing up and offering similar products in the market. To put a further dent in your customer base, rival companies might even provide the same value as you and at a much more lower price.

The strategy some companies employ to at this point is to either lower their prices or increase their product’s value. By adding more features to their product and doubling marketing efforts, some businesses have successfully maintained their value-based pricing.

Also, to increase revenue at this stage despite the presence of aggressive competitors, some companies extend their niche and market to new customers.

Pricing variation for the maturity stage

Unlike other stages, the competition at this level is extremely fierce and generating impressive revenue becomes triple hard. Besides, customers are already used to your product and may want to try something new. So the trick some organizations who want to sustain a value-based price use during this saturation level is to carry out market research to identify new pain points of customers.

Guided by the research findings, they can make relevant additions to their product or service, thus increasing the product value in customers’ perception. That way, and through aggressive marketing that emphasizes their product uniqueness, some companies have been able to retain and attract new customers.

In addition, to increase their customer base, companies run sales, issue special discounts, and offer exclusive membership deals on a periodical basis. Finally, for businesses that are unable to exceed the value provided by rivals, the survival tactic involves cutting prices to pull in customers.

Pricing variation for the decline stage

The pricing strategy used in the declining phase is majorly low pricing. Furthermore, to protect revenue, companies try to cut production costs to sustain their low prices. Another strategy used is to offer discounts and bundling deals.

With bundling, the declining product is included with other in-demand products. Thus, the high demand for those other products move the sale of the declining good or service.

Surprisingly, during decline, some companies have been able to recycle a product back into the maturity stage by adding newer features and increased targeted marketing.

How to Determine Your Product Life Cycle Stage

All products – be it tangible or intangible – pass through the four product life cycle stages. As we mentioned earlier, each of these stages may last for either a couple of weeks or several years.

However, at all times, it is vital for companies to know what stage of the product life cycle whatever they are selling is. The knowledge is essential when deciding on where to allocate resources and when setting performance goals like sales/profit growth targets.

That said, there are characteristics peculiar to each product life cycle stage that can help business owners pinpoint what phase their product or service is currently at.


The introduction stage, which is also the development stage, comprises unique elements such as brainstorming, preliminary or detailed design, prototyping, and production. Additionally, most products at this stage experience meager sales resulting in possible losses.

Depending on the nature of the product, the introduction stage could go on for weeks or months in the case of food products. In other instances, it might extend into years in the case of drug products waiting for approval.


You can determine whether you’re in the growth phase by analyzing your sales and profit figures. During this stage, sales figures usually slope upward due to a combination of targeted marketing and higher product quality. As a result, the sales volume at this level is generally high.


The sales and profit for mature products are usually flat due to more competing alternatives and intense market saturation. At this stage, companies tend to lower prices and increase advertising in order to gain market share. However, these tactics sometimes lead to reduced profit margins if the volume of sales remains stagnant.


During decline, the sales and profit figures of a product reduce drastically due to evolving technologies and changing consumer preferences. Other factors that drastically reduce sales at this level include regulatory changes, aggressive competition, and quality control issues.


Key Contact

Baydhir Badjoko, CEO The Consultants bvba

+ 32 3 297 55 78 |


This Article is part of our Product Life Cycle Series

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