By Product Pricing

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Definition: By Product Pricing

By Product Pricing is a pricing strategy in which the by products of a process are also sold separately at a specific price so as to earn additional revenue from the same infrastructure and setup. By product is something which is produced as a result of producing something else ( the main product). Usually, the byproducts are disposed off and have little value.

But in by product pricing, the by product has significant value and the manufacturer can gain competitive advantage by reducing the price of the main product or recovering some of his expenses by selling the valuable by product.

Example of By Product Pricing :

When meat is processed for human consumption, the by product can be used as food for dog/cat. So the manufacturer can sell it in market to recover some of his expenses say transportation and storage costs.

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