The document discusses various pricing strategies used to determine the price of products and services. It explains penetration pricing, market skimming, value pricing, psychological pricing, price discrimination, tender pricing, destroyer pricing, full cost pricing, target pricing, marginal cost pricing, and cost plus pricing. Key factors considered in pricing include costs, demand, competition, market trends, and objectives. Pricing models aim to maximize profits, cover costs, attract customers, and eliminate competition.

2.  Method use to price a product or a service
 It is aimed at finding a product’s price
 Determined on expenses such as advertising
and labour
 It also includes marketing
objectives, consumer demand, product
attributes
 Competitors pricing, market and economic
trends also play a vital role in deciding the
price

3.  Penetration Pricing
 Market Skimming
 Value Pricing
 Psychological Pricing
 Price Discrimination
 Tender Pricing
 Destroyer Pricing
 Full Cost Pricing
 Target Pricing
 Marginal Cost Pricing
 Cost Plus Pricing

4.  Prices set to penetrate the market
 Low prices to secure high volumes
 To attract customers to a new product or service
 Prices are low to get competitors customer
 Typically used in mass market products like –
Chocolates, household goods, food stuffs etc.

5.  High price and low volumes
 Skimming the profit from the market
 Goods are sold at a higher price so that fewer
sales are required to break even
 Skimming is used to reimburse the cost of
investment of research into the product
 Eg. Playstation, jewellery, digital technology etc.

6.  Price is set in accordance to customer
perceptions about the product
 It is always predicated upon an understanding
of customer value
 It is successful when products are sold in
niche market
 Eg. Rolls Royce, Rolex, Private jets etc.

7.  Pricing designed to have a psychological
impact
 It is used to play with the consumers
perceptions
 Classic example – selling a Television set for
Rs.9999 instead of Rs.10000

8.  Charging a different price for the same
goods/services in different markets
 It allows the company to earn a higher profit
 The company charges each customer the
maximum that he or she is willing to pay
 Eg. Movie theatre charge 3 different ticket
rates – Platinum, Gold and Silver

9.  Many Contracts are awarded on a tender basis
 Firm (or firms) submit their prices for carrying
out their works
 Purchaser then chooses which represents best
value for the contract
 It is mostly done in secret
 Eg. Government Contracts

10.  Deliberately setting prices low in order to
eliminate the competition
 Offering free gifts/products to force out
(normally) smaller and weaker out of business
 Done to prevent new entrants into the market
 It is highly anti-competitive
 Illegal in countries like Australia and The United
States of America

11.  The price is set to cover the variable cost and the fixed
cost
 It is also called as a Absorption Cost Pricing/Break Even
Pricing
 A price at which the cost or expenses are equal to
revenues
 A no loss or gain situation
 Eg. If sales go below 200 company makes loss and if it
goes above 200 it makes profit so company should achieve
to sell atleast 200 to attain break even

12.  The selling price is calculated to produce a
particular rate of investment
 These pricing methods are used by public
utilities like electric companies
 It is also useful for companies with high
investments – Automobile manufacturers

13.  The method of setting the price of a product
to equal the cost of producing an extra unit of
output
 The cost of producing one extra unit
 Marginal cost pricing allows flexibility
 It also aims to achieve “contribution” towards
fixed costs and profit

14.  One of the simplest pricing method
 The company calculates the cost of
producing the product and adds on % profit
 This method takes into considerations all
relevant cost
 CPP = Total budgetary factor coat + selling
and distribution cost + mark-up cost