What is Economy Pricing? Definition, How It Works?, Examples

Economy Pricing is a business strategy that helps make the general commodity appealing. It creates a significant price difference between branded and local products. 

Most customers look for the prices, and thus all these companies based on the economy pricing work better in the field. 

In this article, we will discuss many more details about economy pricing. Let’s have a look at some of the essential points below: 

What is Economy Pricing?

Economy Pricing means setting up the prices of the products or services at the bare minimum profit margins. However, this strategy’s basic idea is more interested in making more sales. This strategy allows you to earn a small profit per unit sale. Overall, you will gain more profit due to high sales. 

It highly relates to sales volume. Thus, economy pricing is also referred to as volume-based pricing. It has a simple principle of selling goods and services in a high volume. This helps you go through a healthy cash flow and reliable income stream. 

Economy Pricing
Economy Pricing

This pricing helps you run your business in the long run with sustainability even when you have lower overheads and costs than your competitors. A low-cost base is generally responsible for you to sell the goods and services at a discounted price. 

Economy Pricing Definition – “Economy Pricing is defined as volume-based pricing because you generate the revenue based on the number of goods and services sold. Advertising and marketing costs generally don’t consist of this pricing. 

Economy Pricing Strategy

Economy Pricing Strategy is one of the crucial pricing strategies. Its central concept is ‘economies of scale.’ A business achieves economies of scale when it sells many products at a low per-unit price. 

In the same way, It can also be called volume-based pricing, which means selling large quantities of products at a low price. 

You might think that lowering the per-unit price would lead to decreased profits. However, that is not the case at all. Though you are selling products at low per-unit profit margins, you’re still mass of sales of products. This makes you earn an immense number of products. 

Under the successful Economy Pricing strategy, you need to maintain the followings: 

  • Promotion Expense: The company must manufacture supermarket-type products with low or no advertising expenses. 
  • Production Expense: Your production cost needs to be lower than your competitors. 
  • Growing Customer Base: Your customer base should develop so you can have the maximum possible sales every year. 
  • Economic Conditions: Such products perform even better during the recession and low times. Because all the people move their interest from quality and branded products to cheap and budget-friendly products. 
  • Economies of Scale: This strategy is best for already established companies. 

Economy Pricing Advantages and Disadvantages


There are various advantages of economy pricing. We have mentioned some of them below:

Economy Pricing Advantages
Economy Pricing Advantages

Increased Brand Awareness

Economy Pricing helps you spread the brand awareness of your company. You sell your products and services at the lowest possible price in your business realm. Therefore, your business applies in the eyes of the buyers, and you start selling better. It helps in setting up the brand awareness of the company. 

Easy-To-Use Strategy 

Among all the strategies, It is one of the easiest methods to implement. It doesn’t ask you to plan anything about marketing or advertising. It is easier for any giant company to implement this strategy and acquire more customers and register a higher revenue. However, initial startups and companies can also grow at a good level after acquiring this strategy.  

Low Production and Marketing Costs 

The best thing about this pricing is that it keeps your costs lower. It helps the company to cut down its expenses in production costs and marketing costs. Therefore, you can save money to grow the company and launch new product segments. 

Allows Acquiring More Customers 

The companies that work on this strategy generally sell their products at lower prices than their competitor’s prices. Thus, it is majorly focusing on reaching as many customers as possible. It attracts more customers and allows you to acquire more dye at lower pricing. 


There are various disadvantages of economic pricing. We have mentioned some of them below:

Disadvantages of Economic Pricing
Disadvantages of Economic Pricing

Higher Competition

Various companies in the market are working on the principle of economic pricing. Thus, they all are selling at lower possible rates. It simply creates tough competition in the market. However, the one with the lowest possible price will lead the market. 

Disloyal Customer

All the customers are attracted to these companies due to the lower prices. Thus, if any other provides the same material at a lower price, they would purchase from them. You can only build customer loyalty with this strategy. 

Do Not Serve Quality 

According to this strategy, you must create products with low production costs. It generally makes products of lower quality. Because companies usually use raw materials to create the effects. Hence, it makes the products less qualitative. 

Economy Pricing Examples 

A lot of companies are using this pricing. We have mentioned some of the top-notch examples below: 

1. Store Brands in the Retail Industry

Various companies in the retail sector build local products in their name and sell them through this strategy. Though many branded companies also create the same products, many customers still get attracted to the lower prices of these local brands. 

For instance, Walmart is a global retailer and has launched various local brands, including George, Terra & Sky, Time, Tru, and Wonder Nation. All these work under economy-based pricing. 

2. OTC Drugs in Pharmaceutical Industry

This pricing is widely used in OTC drugs in the pharmaceutical industry. It helps the industry to earn more money over general-use medicines. It includes Paracetamol, Ibuprofen, Antihistamines, and cold suppressants. People generally buy these medicines for general illness purposes. 

3. Economy Class in the Airline and Railway Industry

The airlines and railways have three types of tickets – first class, business class, and economy class. The economy class consists of a cheap ticket and attracts various customers to purchase this ticket. Hence, most passengers choose these tickets over first class and business class. 

Final Words 

There are various companies worldwide, and all use different pricing strategies. Each strategy comes up with its pros and cons. Economy pricing helps create a more significant market share with the lowest possible cost. However, it also requires you to develop low-quality products. We hope you like this guide and find all the information about the strategy. 

Frequently Asked Questions (FAQs)

What are the economy pricing and example?

Economy pricing is a business strategy that helps the generic commodity be more appealing through low prices. In simple words, you avail the products at a minimal cost. Generic medications, including painkillers, are one of the best examples of this model. 

When should economy pricing be used?

Generally, it would help to use this pricing when you have a low production cost. It doesn’t even include the marketing or advertising cost. Therefore, you can use this strategy when you want to build a brand with a lot of customer base regardless of being concerned about the product’s quality.

What are the 4 types of pricing?

There are four types of introductory pricing including Value-based, Competition-based, cost-plus, and dynamic pricing. You can choose any marketing type based on your business model and industry.

What is the pricing policy in the economy?

Pricing policy refers to how a company sets up its prices for products and services. It should be based on the product’s cost, value, demand, and competitors. 

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