The strategy of price lining, also known as product line pricing, is a pricing method used in many retail stores. It helps make purchasing easier by creating distinct categories of products and services.
Price lining is defined as the technique of categorizing goods and services according to price in order to form obvious levels of quality. When items are priced in this way, customers can clearly identify which products are superior even if they know very little about the item they are shopping for.
For price lining to be effective, the gaps in price must be large enough to create a clear distinction for the customer. This way, customers feel they can easily choose between the standard and upgraded options. If the prices are too close to each other, the varying prices simply become confusing.
Price lining makes shopping quick and easy for the consumer by making the choices in quality clear. Because of this, customers often need less assistance from store employees, allowing stores to focus their energy elsewhere. Price lining also makes inventory and reordering easier, since retailers know which level of quality is in the greatest demand.