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Television and Internet providers are notorious for their use of penetration pricing - much to the chagrin of consumers who see massive sudden increases in their bills. Other OTT platforms are following suit by deploying penetration pricing to attract new customers. Today, Netflix is a market leader constituting 51% of streaming subscriptions in the United States. Nevertheless, despite occasional grumbling, people are completely fine with paying the higher subscriptions for the unending flow of good media content.

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We have often heard people complaining about their Netflix subscription prices going up or their one month of free subscription ending.

Netflix is the perfect example of penetration pricing done right.

Follow one of these penetration pricing strategies and you’ll be investing in long-term profit, even if you carry a short-term loss. Here are five examples of penetration pricing strategies being put to work. The expectation with a penetration pricing strategy is that you’ll create brand loyalty and get customers to love your product, increasing their willingness to spend more down the road. Businesses use this strategy to attract customers to a new product or service to win market share. Penetration pricing introduces customers to a new product at a steep discount, and often at a loss to the merchant. That’s where penetration pricing comes in. Retailers need to think outside the box to make waves in the market to catch the attention of potential customers and convert them into loyal consumers. The barriers to entry in a retail market are very high both due to the heavy competition and demanding consumer base. In a market heavily driven by consumer trust and brand loyalty, many consumers are reluctant to switch brands or try new products.