This document discusses retail pricing strategies. It defines retail price as the cost of a product plus markup. Retailers must determine the right price that customers are willing to pay and retailers accept. Pricing strategies can be cost-oriented, demand-oriented, or competition-oriented. The document outlines various pricing approaches including skimming prices, market penetration pricing, leader pricing, price bundling, multi-unit pricing, discount pricing, everyday low pricing, and odd pricing. Formulas are provided for calculating markup percentage based on retail price or cost.

1. RETAIL PRICING
PRESENTED BY :- SUMIT BEHURA
REGD . NO:-150402100038

2. Retail price means the cost of a product plus
mark up of that product is retail price. when it is
sold to the end user for consumption, not for
resale through a third party distribution channel.
The right price is one consumers are willing
and able to pay and retailers are willing to accept
in exchange for merchandise and services.
Introduction

3. 1. Cost of goods : Cost of Merchandise
Expenses incurred towards
transportation,
Taxes, duties levies etc.
2. Expenses Incurred : Fixed expenses
Variable expenses
3. Fixed Expenses : Shop rent, Head Office costs etc
4. Variable expenses : Merchandise margins, product mix
costs
ELEMENT OF RETAIL PRICE

4. Mark Up percentage can be expressed as :
Mark Up percent (based on Retail Price) = Mark Up in
Rupees / Retail Price
Mark Up percent (based on Cost) = Mark Up in Rupees /
Cost
THE FOLLOWING FORMULA WOULD
APPLY

5. Cost Price of a product = Rs.300
Mark Up = Rs.180
Retail Price = Rs. 480
Mark Up % on Retail = 180 / 480 = 37.5%
Mark Up % on Cost = 180 / 300 = 60 %
Difference between the selling price and cost is Mark Up
Retail Price = Cost + Mark Up

6. 1. Cost Oriented
2. Demand Oriented
3. Competition Oriented
DEVELOPING A PRICING STRATEGY

7.  Focuses on quantities the customers would buy at
various prices
 It depends on perceived value attached to the
product by customers
 Sometimes a high priced product is perceived to be of
high quality
 Sometimes a low priced product is perceived to be of
high quality
Demand Oriented

8.  Competitors play a key role in determining price
 Retailer fixes price on par with the competitors
 Retailer fixes price above the competitor’s price
 Retailer fixes price below the competitor’s price
Competition Oriented

9.  Skimming price
 Market Penetration
 Leader Pricing
 Price Bundling
 Multi-Unit Pricing
 Discount Pricing
 Everyday Low Pricing
 Odd Pricing
APPROACHES TO PRICING STRATEGY

10.  It is a pricing strategy where in firms Strategy to charge
a high price initially and attract customers
 Gradually reduce it if necessary
Market Penetration
 It is a pricing strategy in which the retailer seeks to
achieve large revenues by setting low prices and selling
high unit volume
 Opposite of Market Skimming
 Low prices stimulate purchases
 Low prices discourages competitors from entering the
market
Skimming price

11.  Retailer sells few items at deep discounts
 This increases traffic and sales
 Heavily advertised to attract customers into the store.
 Items best suited for this type of pricing are those that are
bought frequently
Price Bundling
 Retailer bundles a few products and offers them at
a particular price
 Price bundling helps increase sale of related items
Leader Pricing

12.  Retailer offers discounts to customers who buy in large
quantities or who buy a product in bundle
 This involves value pricing for more than one of the same
item
 Example: Offer price of one T-shirt for Rs.250 and two T-
shirts for Rs.350
Everyday Low Pricing
 It is known as EDLP
 Strategy adopted by retailers who continually price their
products lower than the other retailers in the area
 Example: Food Bazaar, shopping mall
Multi-Unit Pricing

13.  Strategy is to set retail prices in such a manner that the
price ends in odd numbers
 Example: Rs.99.99, Rs.199.99 or Rs.299.99
Odd Pricing