Customary prices are fixed to products or services and don’t change for a long time, remaining stable and invariable. This feature of the price is used for the customary pricing approach. The nature of customary pricing is revealed in products and services that have been present on the market for a considerable time. It should be noted that this price should be high enough for an organization or company to be able to profit considerably on their products or services. The very term “customary price” is derived from its distinct feature of stability at various retail locations.
This approach is based on the perception of the company’s products by their customers, who usually think that price is totally OK for that particular product or price.
The stability of the product’s price determines its cost. As a rule, the price is not affected by seasonal changes and doesn’t depend on economic cycles.
For new products and services, it is obvious that this approach will not work. Business owners and managers should first get their feet wet in the market and decide upon the price by the trial and error method. The customary pricing approach will work for products and services that customers get used to, and for ones that they frequently use in their daily lives. Usually, these products don’t have substitutes, and due to their longevity, they create brand loyalty with the customers.