Which pricing approach involves setting a low price for a main product and higher margins on related consumables?

Which pricing approach involves setting a low price for a main product and higher margins on related consumables?

• A. Dynamic pricing.
• B. Target pricing.
• C. Captive product pricing.
• D. Market penetration pricing.

Answer: (C)

This targets captive product pricing: you lure customers with a low price on the main product, then secure higher margins from essential related consumables or add-ons. The main product is often discounted to attract purchases, while ongoing needs—like ink cartridges, blades, or game titles—carry much higher margins because customers are “captive” to those required consumables to use the product. Real-world examples include printers sold cheaply but with expensive ink, or game consoles offered at a modest price with high-margin games and accessories. The other approaches don’t emphasize this dynamic: dynamic pricing changes with demand, not about locking customers into expensive recurring consumables; target pricing focuses on meeting a target price from a customer willingness-to-pay perspective; market penetration pricing aims to win market share with low prices across the board, not to monetize consumables after the initial sale.

This targets captive product pricing: you lure customers with a low price on the main product, then secure higher margins from essential related consumables or add-ons. The main product is often discounted to attract purchases, while ongoing needs—like ink cartridges, blades, or game titles—carry much higher margins because customers are “captive” to those required consumables to use the product.

Real-world examples include printers sold cheaply but with expensive ink, or game consoles offered at a modest price with high-margin games and accessories. The other approaches don’t emphasize this dynamic: dynamic pricing changes with demand, not about locking customers into expensive recurring consumables; target pricing focuses on meeting a target price from a customer willingness-to-pay perspective; market penetration pricing aims to win market share with low prices across the board, not to monetize consumables after the initial sale.