DISCUSSED

1. METHODS OF
PRICING
DETERMINITATION

2. COST BASED PRICING
METHOD
COMEPETITION BASED
METHOD
DEMAND BASED PRICING
METHOD

3. A) COST BASED
PRICING METHOD
2. Target
return pricing
1.COST PLUS
PRICING

4.  Cost plus pricing Method
 EXAMPLE: A firm manufacture a ladies suits
Suits (rupees)
PRIME COST 500
Manufacturing
overhead
200
Administration
expenses
300
Cost of sale 1000
PROFIT (25% ON
COST)
400
SELLING PRICE 1400

5. 2. Target Return pricing Formula:
 Selling price = Average unit cost
 1- desired markup %
 Price of shoes : 700
 1- 30%
 700
 0.70
 Selling price= Rs 1000

6. BAESD ON BREAK EVEN ANALYSIS

7. B)
Competition
based method
2.Sealed Bid
pricing
1.Going Rate
pricing

8. COST AND
MARK-UP
COMPETITO
RS
(rupees)
ALTERNATI
VE 1
ALTERNATI
VE 2
ALTERNATI
VE 3
Cost on sale 5100 5100 5100 5100
Profit margin 1000 900 1000 800
Final price 6000 6000 6100 5900

9. EXAMPLES OF GOING RATE PRICING

10.  Effect of different bids on expected profits
2. Sealed Bid Pricing
CASE FIRMS
BID
(RUPEE
S)
FIRM
PROFIT
(RS)
A
GUESS(
RS)
EXPECT
ED
PROFIT
1. 6500 100 85% 85
2. 7000 500 36% 180
3. 7500 1000 9% 90
4. 8000 150 3% 54
5. 2100 2100 1% 21

11.  Prime Minister Narinder Modi
 Sell suit = 4 crore 70 lakh

12. C) Demand
Based Pricing
2. Perceived
Value pricing
1. Demand
Modified break
even analysis

14.  Examlpe: a) Mc donalds
 B) SAMSUNG MOBILE
 More demand More Price

15. Examples of Demand based pricing
• Low Demand Low Price

16.  Meaning = It is the buyer’s perception value
and not the seller cost which is the key to the
product pricing.

17. Example of perceived value pricing
 TATA TRACTORS
 RS 90000
 MAHINDRA TRACTOR
 RS 100000
 10000 extra pay for
durability and superior
services

18.  MEANING : Resale price maintenance (RPM)
is the practice whereby a manufacturer and its
distributors agree that the distributors will sell
the manufacturer's product at
certain prices (resale price maintenance.