Pricing Decisions

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PRICING DECISIONS
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PRICING DECISIONS
Fenty beauty company, majorly based on providing beauty products, could also offer
modeling costumes. Still, under that line of service delivery, it could encounter pricing decisions
based on three categories: Competition based pricing, Cost-plus pricing, and Penetration pricing.
Modeling costumes and its mainline products could gain entry to many markets all over.
Market-based pricing is a market strategy based on establishing the price of a product based on
conditions of the market. After comparing competitor’s price, the firm will come up with their
appropriate price, hence this method is market data reliant. (Hinterhuber, 2015). Take Kanye's
clothing line company and other companies as an example who deal with same products, and
regroup them from the most expensive selling to the most affordable companies. Then understand
where to fix their price.
Full cost pricing model is an essential strategy that works by ensuring a guarantee you
never lose money in a sale. Fenty beauty will first be required to study the costs encountered in
modeling costumes in terms of, raw materials, labor force, storage, equipment, and the like. Full
cost pricing works through calculating several items: step 1; Calculating total production cost of
the product. Step2; Calculate using the cost and components to get component cost. Step3;
Augment component cost by hike percentage (Hinterhuber,2015). As an example, if component
cost is $20 and hike percentage is 40, then the net margin is $20multiply by 40/100= $8. The price
of the product is $12.
Predatory model is based on setting prices by a new company in the market lower than
competitor’s price to establish market space and get market monopoly. The company acquires its
market share without necessarily gaining profits, then in later stage re-evaluate its prices

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accordingly (Hinterhuber,2015). Let’s consider competition from Kanye’s clothing line making a
garment at maybe $20.Fenty company enters the market and sells a similar product at $10.
Fenty company focused on producing and selling products in line with skin cosmetics,
venturing in creating cloth fashion brands, could be a complex field to venture in but provided the
well-established market structure of their already in place products, could still penetrate the market
well. As long as it considers good pricing decisions, its effects will be well received.

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Reference
Hinterhuber, A. (2015). Violations of rational choice principles in pricing decisions. Industrial
Marketing Management, 47, 65-74.