Pricing strategy is a necessary step in a marketing mix to make a product or service profitable. The two types a business must consider are the list and net price. Determining the correct pricing of each sets a product's competitive edge and helps dictate demand for the product or service among consumers.
The list price is what consumers would pay before any price reductions or rebates. It is the baseline cost of the product, and is regularly referred to as the "regular" price.
The net price refers to what the consumer pays after a discount or sales promotions. For example, a customer may want an item for $80. If it's posted at its regular cost, the list price is $80. With a coupon for 15 percent off, the list price remains the same, but the net price drops to $68.
While the list price offers a higher profit, discounts can be beneficial to the business. Discounts such as coupons can draw buyers into trying a product, which can lead to them becoming regular customers. A low net price may also edge out the competition. In addition, advertising a low net price may help stimulate a stagnant or faltering brand.