Most gas station owners opt to price their products to remain competitive and to maximize profitability. When it comes to determining prices, there are many options available including the following:
Cost-Plus Pricing - Gas stations that use this pricing model base their product price on cost plus an additional amount for profit. This method is based on the assumption that all competitors are using it, and it takes into account the industry's average markup.
Target Costing - Gas stations that use this pricing model base their product price on the cost of producing or acquiring the product plus a target gross profit margin that takes into account both fixed and variable expenses.
Promotional Pricing - Small business owners often use promotional pricing to attract customers at different times of the day, week, or year. Promotional pricing can be effective because it tends to lower the customer's per-unit cost and incentivizes them to purchase more than one unit at a time.
Psychological Pricing - Gas stations use psychological pricing to convey status and quality via prices that end in $0.99, $9.99, and $199.99. This strategy works by leveraging the power of relative comparison to influence customer purchase decisions.