This document discusses pricing strategies for manufacturers. It outlines objectives for pricing like maximizing profit and market penetration. It also covers considerations for pricing like competition, demand, and costs of production. The document then describes different pricing methodologies such as mark-up pricing, target pricing, auction pricing, and perceived pricing. It discusses adapting price levels using strategies like reference pricing and psychological pricing. Finally, it concludes that customers will pay high prices if products provide satisfaction and value.

1. How right Pricing for the
Manufacturer is the fair price
Page 1
for the Prospect.

2. Price is not just a number tag.
Price comes in forms and
Page 2
performs many function

3. Page 3
Steps in determining Price

4. Page 4
Objective
• Maximum Current Profit.
• Market Penetration.
• Market Skimming.
• Product Quality and Price relation.

5. Page 5
Consideration Of Pricing
1) Competition
2) Demand (Elastic/ Inelastic)
3) Cost Of Production (Variable/
Fixed/ Target Cost)
Target Cost = R & D + Market
Research Cost + Production Cost
+ Engineering Cost (Promotion +
Product + Distribution)
4) Others Factor

6. Page 6
Methodology Of Pricing
 Mark Up Pricing
 Target Pricing
 Auction Pricing
 Perceived Pricing

7. Page 7
Mark Up Pricing
Variable Cost = Rs 10/ Unit
Fixed Cost = Rs 3,00,000
Expected Sales Unit = 50,000
Fixed Cost / Unit = 3,00,000 / 50,000
= Rs 6 / Unit
Per Unit Cost = Rs (10 + 6 ) = Rs 16
ROI Per Unit = 20 %
Price Per Unit = 16 + (20% of 16)
= Rs 20.

8. Page 8
Target Return
Expected Return = Rs 10,00,000
Per Unit Cost = Rs 16
Sales Unit = 50,000
ROI = 20 %
Price Per Unit = 20% of 10,00,000
50,000
= 4 + 16
= Rs 20

9. Page 9
Auction Based Pricing
Possession of Product goes to
Person who Bid the highest

10. Page 10
Perceived Pricing
Product Price Rs 90,000
For Durability Rs 7,000
For Reliability Rs 6,000
For Service Rs 5,000
For Warranty Rs 2,000
Price = Rs 1,10,000
Discount = Rs 10,000
Actual Price = Rs 1,00,000

11. Page 11
Adaptation Of Price Level
 Reference Pricing
 Psychological Pricing
 Promotional Pricing (Festival)
 Discrimination (According to
different segment, distribution
channel, monthly, yearly)

12. Is Pricing For Manufacturer Fair
Page 12
Price For Prospect ?
Today’s Customer are ready to pay
any amount asked by the
Manufacturer provided that the
Product being purchased give them
Satisfaction, Value for Money
(Functional, Emotional,
Informational, Conditional, Social,
Spiritual), Differentiation.

13. Page 13
Presented By:
Sonali Srivastava