pricing strategies of Forever 21
Models of pricing
cost-plus pricing: ( the cost of producing the product+profit )
Forever 21 cut down the cost by hiring cheap labor and applying cheap design. Many workers in Forever 21 stores are minimum-wage high-school workers. Meanwhile, Forever 21 moves its production to Asia to pay less to workers. Forever 21 has faced more than 50 copyright lawsuit for stealing work of designers, ranging from Anna Sui to smaller independent designers like Trovata. Forever 21 does not spend a lot of employing designers.
Customers can buy goods at a low price in Forever 21, because Forever 21 cut down its cost by applying two methods: cheap labor and cheap design.
Market-oriented pricing: ( if competitors are pricing products at a lower price, Forever 21 should should price its products at a lower price)
The main competitor of Forever 21 is H&M, they both provide affordable prices and latest styles to customers. When H&M manages to provide a lower price to customers, Forever 21 should take some measures to win customers. For instance, Forever 21 can cut down price as well, and provides some deals.
Psychological pricing: ( price designed to have a positive psychological impact ）
Forever 21 often sells its products at $29.95 or $29.99, rather than $30.
references:http://articles.businessinsider.com/2012-02-27/strategy/31103150_1_cheap-labor-child-labor-factories http://en.wikipedia.org/wiki/Pricing_strategies http://checkwin.com/?place=forever-21