This document outlines strategic pricing approaches and concepts. It discusses cost-plus pricing, which sets price as costs plus a percentage markup. Customer-driven pricing sets price based on customer perceived value rather than costs. Share-driven pricing matches competitors' prices to gain market share. Strategic pricing is defined as proactive, profit-driven, and value-based. It considers five elements: value creation, price structure, communicating price and value, pricing policy, and price level. Strategic pricing creates a pricing pyramid to maximize profits.

1. STRATEGIC PRICING
Coordinating the Drivers of Profitability

2. TOPIC OUTLINE
• Cost-plus Pricing
• Customer-Driven Pricing
• Share-Driven Pricing
• What’s Strategic Pricing?
• Value Creation
• Price Structure
• Price and Value Communication
• Pricing Policy
• Price Level
• Implementing the Pricing Strategy

3. Cost-plus Pricing
Cost-plus Pricing: plus an amount (money) or a
percentage on the cost of production and
distribution of products
Price = (VC per unit of product + FC allocated to the
product unit) x (1 + Percentage)
Student present advantages and disadvantages

4. Customer-Driven Pricing
Satisfy their needs and wants
Value of products or services
ra (rather than the seller's expense)
Customers will change
consumption habits depending on the prices of
products and services. And different customers can
set different celling prices for same products and
services

5. Share-Driven Pricing
(Competition-Driven Pricing)
• The seller makes a decision based on the prices of
its competition.
• Competition-driven pricing focuses on determining
a price that will achieve the most profitable
market share and does not always mean the price
is the same as the competition, it could be slightly
lower.

6. What’s Strategic Pricing?
• Define and differentiate tactical approaches (xác định và phân biệt thủ thuật
tiếp cận):
- Cost
- Market (customer) Driven Pricing
- Competitor
• Introduce the identifying characteristics (giới thiệu đặc điểm nhận dạng):
- Proactive chủ động
- Profit-driven
- Value-based
• Define the five elements
- Value Creation
- Price Structure
- Price and Value Communication
- Pricing Policy
- Price Level

7. The Strategic Pricing Pyramid

9. Total Per Unit
Direct Variable Costs $3,000,000 $3.00
Direct Fixed Costs $3,000,000 $3.00
Administrative Overhead $1,500,000 $1.50
Full Cost $7,500,000 $7.50
Revenue $9,000,000 $9.00
Projected Costs and Revenues at
Expected Sales = 1,000,000 units
Profit $1,500,000 $1.50

10. Actual Costs and Revenue at
Actual Sales = 750,000 units
Total Per Unit
Direct Variable Costs $2,250,000 $3.00
Direct Fixed Costs $3,000,000 $4.00
Administrative Overhead$1,500,000 $2.00
Full Cost $6,750,000 $9.00
Revenue $6,750,000 $9.00
Profit $0 $0