By-product pricing refers to set a price for by-products to make the main product’s price more competitive. Producing products and services often generates by products. If the by-products have no value and if getting rid of them is costly, this will affect pricing of the main product. Using by-product pricing, the company seeks a market for these by-products to help off set the costs of disposing of them and help make the price of the main product more competitive.
Definition