This document discusses costing and pricing strategies for businesses. It defines cost as the amount that must be paid to produce or acquire something. There are different types of costs like material, labor, overhead, fixed, and variable costs. Pricing is setting the price customers pay for products and services. Pricing is an important decision that considers costs, competition, objectives, customer response, and legal issues. Some common pricing strategies discussed are premium, penetration, psychological, bundle, cost-plus, competitive, predatory, loss leader, price discrimination, pay what you want, freemium, and dynamic pricing. Understanding costs and using different pricing strategies can help businesses maximize profits.

1. Costing & Pricing
VHNSN College
3/3/2020

2. Hello!I am Revathy Rajasekaran
You can find me at @ revathy@vvvcollege.org
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3. Why
Costing &
Pricing ?
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4. Know the correct pricing and maximize the profit
Help in Business management decision making
Know whether you earn a profit or loss
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5. COSTING
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6. × Cost is an amount that has to be paid or given up
in order to get some thing.
× In business and accounting, cost is the monetary
value that has been spent by a company in order
to offer a product or service.
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7. Write down things
you need to include in
cost of ProducT ?
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9. TYPES OF COST
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10. ×Material Cost
× Labor Cost
× Overheads
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11. ×Fixed Cost
×Variable Cost
×Semi- variable cost
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13. ×R & D Cost
×Production/ Manufacturing Cost
×Marketing Cost (Selling & Distribution)
×Administrative cost
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15. PRICING
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16. × Deciding the amount required as payment for something
offered for sale
× Business sets the price at which it will sell its products and
services
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17. Importance
of PRICING
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18. × Pricing is one of the most vital decisions made by
management
× Price too high and you lose the sale
× Price too low and you can’t make money
× Two fundamental ways to grow revenue
× raise your price
× increase the quantity you sell
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19. WHAT
DETERMINE
THE PRICE?
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20. Cost
Competition
Pricing Objectives
Customers Interpretation & Response
Channel members expectation
LEGAL & Regulatory Issues
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21. Types of pricing
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22. Premium/Prestige Pricing
Price is set high to reflect the exclusiveness
of the product.
Substantial competitive advantage, Brand Image

23. Price set low to gain market Share
Once achieved, price is increased
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24. Setting a relatively high introductory price of the product
when the product is new and unique and the market has fewer
competitors
Maximise the profits on early adopters before competitors
enter the market
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25. Psychological Pricing
Strategies marketers use to make customers
buy the products, triggered by emotions
rather than logic.

26. Bundle pricing
• Involves selling set of goods or services at
lower prices than they would have actually
cost if sold separately
• Bundle unsold products or products with
less demand with the high selling products

27. Economic pricing is based on the ‘no-frills’ low pricing
approach strategy the expense of production cost is
minimized.
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28. × Discounts
× Buy 1 Get 1
× Cash Rebates
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29. Geographical Pricing
Notice variation in price in different parts of the
world
Involves Shipping Cost

30. Product Line pricing
• Range of products or service and the pricing
reflects the benefits of part of the range

31. × Companies offers extras that are optional
× The extra will increase the price overall
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32. × Setting a price for the product that must be used along
with main product such as blade for razor.
× Price the razor at or below cost make profit on blades
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33. Competitive Pricing
Setting a price based on what the competition
charges

34. Cost plus pricing
A percentage is added to the costs as a profit
margin to determine final price.

35. × Price of certain product becomes more or less fixed
× Changes in cost are reflected in changes in quantity or
quality
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36. × Single price for all product to all customer
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37. Predatory Pricing
Predatory pricing is an aggressive pricing
strategy of setting the prices low to a point
where the offering is not even profitable.
An attempt to eliminate the competition and get
the most market share.

38. Loss leader pricing
• Items used to make customers get into the
store and to generate store traffic

39. × When the same product is sold at different prices to
different sets of consumers, it is called price discrimination.
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40. × Pay what you want is a pricing strategy where the power of
deciding the price of a product is given to the buyers, who
pay their desired amounts for a product
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41. FreeMIUM
• Freemium is an Internet-based pricing
strategy where basic services are provided
free of charge but charges are levied on
additional premium features.

42. × setting a price based on how much the customer believes
what you’re selling is worth
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43. × Dynamic pricing is also known as surge pricing, demand
pricing, or time-based pricing. It’s a flexible pricing
strategy where prices fluctuate based on market and
customer demand.
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45. THANKS!Any questions?
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