The document discusses pricing strategies and methods. It outlines several pricing strategies including penetration pricing, premium pricing, price skimming, and value pricing. It also describes various pricing methods such as cost-based pricing, demand-based pricing, and competition-based pricing. The document provides examples of how different companies have implemented pricing strategies. It emphasizes that setting the right price is important for business success and outlines the basic steps in setting a product price, including determining objectives, estimating demand and costs, analyzing competitors, selecting a pricing method, and determining the final price.

1. Pricing
Sagar Institute of Science
and Technology and School of Management
Sistec School Of Management

2. Team Members
 Vishal Chouksey
 Nooreen Rehman
 Virendra Maran
 Sarjan Meena
 Roshni Bisen
 Anmol Shekhpuri
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3. CONTENTS
 Pricing Introduction
 Strategy
 Methods
 Price Setting
 Pricing a Product
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4. Pricing An Introduction
• Pricing is the process whereby a business
sets the price at which it will sell its
products and services, and may be part of
the business's marketing plan.
• Method adopted by a firm to set its selling
price. It usually depends on the firm's
average costs, and on the customer's
perceived value of the product in
comparison to his or her perceived value of
the competing products.
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5. Pricing strategy
• Pricing strategy is a way of finding a
competitive price of a product or a
service.
• A business can use a variety of
pricing strategies when selling a
product or service. The price can be
set to maximize profitability for each
unit sold or from the market overall.
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6. Pricing Strategies
1-2
• Penetration Pricing
• Premium Pricing
3-4
• Price Skimming
• Psychological Pricing
5-6
• Optional Product Pricing
• Value Pricing
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7. Penetration Pricing
• The price charged for products and
services is set artificially low in order
to gain market share. Once this is
achieved, the price is increased. This
approach was used by France
Telecom and Sky TV, Once there is a
large number of subscribers prices
gradually creep up.
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8. Premium Pricing
• Use a high price where there is a
unique brand. This approach is used
where a substantial competitive
advantage exists and the marketer is
safe in the knowledge that they can
charge a relatively higher price. Such
high prices are charged for luxuries
such as Canard Cruises, Savoy Hotel
rooms, and first class air travel.
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9. Price Skimming
• Price skimming sees a company
charge a higher price because it has a
substantial competitive advantage.
However, the advantage tends not to
be sustainable. The high price
attracts new competitors into the
market, and the price inevitably falls
due to increased supply.
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10. Psychological Pricing
• This approach is used when the
marketer wants the consumer to
respond on an emotional, rather
than rational basis.
• For example Price Point Perspective
(PPP) 0.99 Paisa not INR 1.
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11. Optional Product Pricing
• Where products have complements,
companies will charge a premium
price since the consumer has no
choice.
• Example:- A razor manufacturer will
charge a low price for the first plastic
razor and recoup its margin (and
more) from the sale of the blades
that fit the razor.
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12. Value Pricing
• This approach is used where external
factors such as recession or increased
competition force companies to
provide value products and services
to retain sales.
• For Example Value meals at
McDonalds and other
fast-food restaurants.
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13. Pricing Strategy Matrix
Economic Penetration
Skimming Premium
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Low High
Quality
L
O
W
H
i
g
h
P
r
i
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e

14. Pricing Methods
Pricing
Method
Cost-Based
Pricing
Demand-
Based Pricing
Competition-
Based Pricing
Other-Pricing
Methods
Cost Plus Pricing
Markup Pricing
Value Pricing
Target Return
Pricing
Going Rate Pricing
Transfer Pricing
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15. Pricing A Product
Definition:- To establish a selling price
for a product.
“No matter what type of product you
sell, the price you charge your
customers or clients will have a direct
effect on the success of your
business.”
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16. The basic rules of Pricing
1. All prices must cover costs and
profits.
2. The most effective way to lower
prices is to lower costs.
3. Prices must be established to
assure sales.
4. Review prices frequently to assure
that they reflect the dynamics of
cost, market demand, response to
the competition, and profit
objectives.
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17. Stages of setting price
6
5
4
3
2
1
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Pricing Objective
Determine Demand
Estimate Cost
Competitor Analysis
Price Method
Select Final Price

18. Conclusion
• Unlike the other ingredients of the
marketing mix, price generates
revenue, so arriving at the correct
price is vital to the success of the
business. However, there is no one
magic pricing strategy that will
guarantee success, so a firm should
be constantly researching the market
to identify a correct policy for its
product or service.
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19. Sistec School Of Management