HLP vs. EDLP : There are ample strategies applicable to achieve good growth in comparatively low time in the business sector. Among them, pricing techniques are one of the most important ones. As without setting an appropriate price, it is impossible to gain profit out of expenses.
Besides, a trader needs to assure that he can easily repay his borrowed 1000 pounds loans as soon as possible. Systematic repayment will face obstacles if failed to make profit. However, one direct way to make a profit is to sell the manufactured products or services.
Without setting a price, it is not possible to sell a product. While setting the price, the concept of Everyday Low Price (EDLP) and another parallel concept High Low Price (HLP), come into the scenario. Undoubtedly, both of these play a major role while assuring profit amount.
What is EDLP?
Everyday Low Price is a strategy. It helps to attract the attention of people by setting comparatively low prices presently in the market. This remains constant for a long time.
Apart from offering low prices, by applying this technique, a businessman also offers astonishing discounts, which is enough to grab the attention of the people.
Such a pricing technique helps in advertising products as well as spreads the name of EDLP offering company.
What is HLP?
High Low Price is another pricing technique that is a parallel theory against EDLP and gained popularity.
According to this concept, a consumer witnessed a price swing from high to low. Generally, the HLP offering company used to tag high prices on every product they manufacture.
The company used to lower down the price after getting good popularity and spending some time in the market. In this way, that entity earned a good amount of money within no time.
However, a pricing technique is not applicable for every single company. Instead, this pricing technique suits perfectly for only those companies having good brand value and reputation. Only then a consumer will buy products in exchange for a high amount.
Therefore, it is not at all difficult to understand that both these techniques bear differences between their concepts.
Let us know about the basic points of difference between EDLP and HLP.
High Low Price vs. Everyday Low Price
- In terms of price –
While the main purpose of HLP is to help an entity earn a huge amount of revenue, primarily, the price of the product remains high for few days.
As experts who introduced this strategy to the business industry strongly believe that initially, a new product has the ability to attract people very much. With the advancement of days, it loses charisma as new competitive products also start launching.
Moreover, when a well-reputed company with brand value manufactures the product, HLP is the best way to earn a huge profit.
On the other hand, EDLP also helped to earn good profit but in a quite different way. Actually, this way is pocket-friendly for consumers and manufacturers too.
Therefore, even if a start-up owner has to borrow bad credit loans with no guarantor, it becomes easy to repay the total outstanding amount with constant low prices. When the number of consumers increases, it indicates the expansion of the customer base for that company.
It may sound like this type of pricing technique best applicable for only small entrepreneurs. It is suitable for people below the poverty line, but this is not true.
Consumers share the basic characteristic of attracted to lower prices.
- In terms of bargaining –
When visiting a shop where the HLP pricing technique has been applied, they usually can exercise the habit of bargaining. The main reason for such activity is to get the product at a low price. Sometimes, due to huge prices and less scope of bargaining, shopkeepers used to lose potential customers.
On the other hand, by applying the pricing strategy of EDLP, there is no question of bargaining in the consumer’s mind. It is because already they are getting the product in astonishing low price. Moreover, this method brings huge customers to the company.
- In terms of quality –
Business entities who apply HLP pricing methods ensure high-quality products to maintain their reputation in the market. Those entities are supposed to consider as quality product manufacturers.
Due to which, they can easily claim high value in exchange of product. Consumers get good quality products, so a particular class of consumers agree to pay a high price.
On the other hand, many marketing experts often make certain claims. They claim that entities used to apply the EDLP technique do not produce a good quality product. Due to this, they can easily offer a low price. However, it is not completely true.
Many reputed companies are following this technique to get attention and earn good profit. Therefore, there is no question of compromising with quality.
Reasons for using EDLP and HLP in business
If you are trying to find out why popularity is behind these two contradictory methods, it is not difficult to know. It serves ample benefits to business entities.
- Notify about upcoming demand –
A business runs on the cycle of demand and supply. Increasing demand indicates the huge manufacturing of products. Besides, both these pricing techniques help to enhance the sale of manufactured goods.
Therefore, as per the sales growth, a business person can easily understand the upcoming demand for that product.
- Curtail down expense on advertisement –
HLP and EDLP both possess different features and contradictory to each other. Still, it is undeniable that both these also serve a common benefit, i.e. reducing expenses on the advertisement.
The major expenditure of a company always spends on the advertisement. By applying these pricing strategies, a business entity can easily curtail down that additional marketing expenditure.
The low price itself becomes the advertisement. Therefore, there is no necessity for additional marketing.