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Status Quo Pricing Strategy

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  • 0:00 Status Quo Pricing…
  • 0:45 Importance of Status…
  • 1:36 Advantage & Disadvantage
  • 2:24 Breaking Free
  • 2:49 Lesson Summary
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Lesson Transcript
Instructor: Wendy Stewart

Wendy teaches college courses in Business, has a master's degree in Business Administration, and has completed all coursework for a Doctorate of Business Administration

Status quo pricing strategy copies the price levels of its competitors or maintains the current price levels of similar products or services on the market. Learn more about the definition, importance, and process of status quo pricing strategy, and test your knowledge with a quiz.

Status Quo Pricing Strategy Defined

Let's say that Michelangelo decides to open a pizza restaurant called Michelangelo's Pizza Palace. His current pizza is pretty good, but it's not much different from his direct competitor down the street, Leonardo's Pizza Pie. Leonardo charges $10 for a medium cheese pizza, so Michelangelo decides to also charge $10 for his medium cheese pizza. Michelangelo has just utilized the status quo pricing strategy.

Status quo pricing strategy copies the price levels of its competitors or maintains the current price levels of similar products or services in the market. Status quo is defined as the way things are, as opposed to the way they could be.

Importance of Status Quo Pricing Strategy

The status quo pricing strategy is one of several adaptive strategies in business. Adaptive strategies are responses to circumstances that are specific to your market. Think about the adaptations of animals in nature. The tiger's stripes and the giraffe's patches make them almost impossible to detect in certain light. They have adapted camouflage to blend in with their surroundings.

Michelangelo's Pizza Palace is also attempting to blend in with its surroundings by charging the same amount of money for its medium cheese pizzas. He may decide to stay at this price for a while, watching to be sure Leonardo doesn't increase or decrease his prices. If he does, Michelangelo will want to follow the status quo pricing strategy and also change his prices to match his competitor.

Status quo pricing strategy is also referred to as active waiting because the owners try to maintain the status quo while waiting for an opportunity.

Advantages & Disadvantages

The advantage of the status quo pricing strategy is that it avoids a potentially damaging battle with a strong competitor. Let's say that Michelangelo decides to offer a 50% off coupon for his medium cheese pizzas to attract some of Leonardo's customers. This would be very expensive for Michelangelo because he would not be making very much profit on these pizzas.

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