By-product pricing is a strategy that sets a price for products that inevitably arise as waste or secondary results in the production of the main product. The goal of this strategy is to generate revenue from these by-products that will cover the costs of their storage and disposal, or even make a small profit.
By effectively pricing and selling by-products, a company can significantly reduce the net cost of producing the main product. This in turn allows the price of the main product to become more competitive in the market. This strategy is especially important in industries such as the chemical industry, the petroleum industry, and the food industry.
