This document discusses various pricing methods used by firms. It covers cost-based methods like cost-plus pricing and mark-up pricing. It also discusses demand-based pricing, competition-based pricing, value pricing, target-return pricing, and breakeven pricing. The document provides examples and explanations of how different pricing methods are calculated and can be applied by organizations.
Internal and external factors affect pricing decisions. Internally, companies consider objectives, costs, and organizational structure. Externally, they analyze the market, demand, competition, and economic conditions. Cost-based pricing sets prices as a markup over costs using methods like cost-plus or markup pricing. Demand and competition-based pricing adjust prices based on those factors. Break-even pricing calculates the price needed to cover fixed and variable costs at different production volumes. Pricing objectives include maximizing profits in the long or short run as well as gaining market share, sales, or returns.
This document discusses different pricing strategies that companies use. It defines pricing strategy as how a company uses pricing to achieve strategic goals like increasing sales volume. The document then describes various pricing strategies such as cost-based pricing, value-based pricing, demand-based pricing, and competition-based pricing. It also discusses strategies for pricing new products versus established products, noting that new products often use lower pricing to gain market share.
Pricing is the process of determining the value of goods and services and involves considering factors such as production costs, market competition, and target consumers. There are various pricing methods including cost-oriented methods like cost-plus pricing which adds a markup to costs, and market-oriented methods like perceived value pricing which considers how customers value quality, advertising, etc. When determining prices, businesses must weigh internal factors like costs and objectives as well as external factors like competition, government regulations, and economic conditions. The goal is to set a price that allows the business to survive in the market and earn a profit.
The document discusses pricing strategies and methods. It defines what a pricing strategy is and identifies key determinants for pricing decisions like organizational objectives, costs, competition, and customer perceptions. It explores different pricing methods like cost-oriented, demand-oriented, and competition-oriented pricing. It also covers pricing tactics like discounts, flexible pricing, and how legal/regulatory factors can influence pricing.
The document discusses pricing strategies and methods. It defines what a pricing strategy is and identifies key determinants for pricing decisions like organizational objectives, costs, competition, and customer perceptions. It also explores different pricing methods like cost-oriented pricing, demand-oriented pricing, and competition-oriented pricing that set prices based on costs, demand levels, and competitor prices respectively. The document emphasizes that price is a key element of the marketing mix and must be considered along with other factors.
This chapter discusses developing and applying pricing strategies. It presents frameworks for setting objectives and policies. It analyzes different pricing approaches like cost-based, demand-based, and competition-based. It also covers implementing strategies, like bundling prices, and adjusting prices over time. The goal is to help firms set prices that maximize sales and profits based on costs, demand, and competitors.
Internal and external factors affect pricing decisions. Internally, companies consider objectives, costs, and organizational structure. Externally, they analyze the market, demand, competition, and economic conditions. Cost-based pricing sets prices as a markup over costs using methods like cost-plus or markup pricing. Demand and competition-based pricing adjust prices based on those factors. Break-even pricing calculates the price needed to cover fixed and variable costs at different production volumes. Pricing objectives include maximizing profits in the long or short run as well as gaining market share, sales, or returns.
This document discusses different pricing strategies that companies use. It defines pricing strategy as how a company uses pricing to achieve strategic goals like increasing sales volume. The document then describes various pricing strategies such as cost-based pricing, value-based pricing, demand-based pricing, and competition-based pricing. It also discusses strategies for pricing new products versus established products, noting that new products often use lower pricing to gain market share.
Pricing is the process of determining the value of goods and services and involves considering factors such as production costs, market competition, and target consumers. There are various pricing methods including cost-oriented methods like cost-plus pricing which adds a markup to costs, and market-oriented methods like perceived value pricing which considers how customers value quality, advertising, etc. When determining prices, businesses must weigh internal factors like costs and objectives as well as external factors like competition, government regulations, and economic conditions. The goal is to set a price that allows the business to survive in the market and earn a profit.
The document discusses pricing strategies and methods. It defines what a pricing strategy is and identifies key determinants for pricing decisions like organizational objectives, costs, competition, and customer perceptions. It explores different pricing methods like cost-oriented, demand-oriented, and competition-oriented pricing. It also covers pricing tactics like discounts, flexible pricing, and how legal/regulatory factors can influence pricing.
The document discusses pricing strategies and methods. It defines what a pricing strategy is and identifies key determinants for pricing decisions like organizational objectives, costs, competition, and customer perceptions. It also explores different pricing methods like cost-oriented pricing, demand-oriented pricing, and competition-oriented pricing that set prices based on costs, demand levels, and competitor prices respectively. The document emphasizes that price is a key element of the marketing mix and must be considered along with other factors.
This chapter discusses developing and applying pricing strategies. It presents frameworks for setting objectives and policies. It analyzes different pricing approaches like cost-based, demand-based, and competition-based. It also covers implementing strategies, like bundling prices, and adjusting prices over time. The goal is to help firms set prices that maximize sales and profits based on costs, demand, and competitors.
The document discusses factors that affect price strategy, including costs, supply and demand, competition, and technological trends. It describes different pricing approaches like cost-based pricing, demand-based pricing, and competition-based pricing. It also covers psychological pricing techniques, calculating markups and discounts, and considerations for updating price strategy.
The document discusses pricing strategies and methods. It identifies key determinants for pricing like objectives, costs, competition and demand. It explores different pricing methods like cost-based, demand-based and competition-based pricing. Legal/regulatory factors and how pricing fits into the overall marketing mix are also addressed.
The document discusses various aspects of pricing strategy and methods. It defines pricing strategy as a plan for setting prices that considers factors like costs, competition, and demand. Some key determinants in setting prices are organizational objectives, costs, competition, and buyers' perceptions. Common pricing methods include cost-based pricing, demand-based pricing, and competition-based pricing. A company's pricing policy guides its overall pricing approach and specific pricing methods are then used to set prices regularly.
This document discusses various pricing techniques businesses can use to set product prices, including cost-based pricing, demand-based pricing, competition-based pricing, and affordability-based pricing. It also identifies key internal factors like marketing objectives and costs, and external factors like elasticity of demand, government regulation, and customer expectations that affect pricing decisions.
The document discusses developing pricing strategy and provides information on:
- Factors that influence pricing like costs, demand, competition
- Common pricing mistakes like not adjusting for market changes
- Consumer psychology related to pricing like reference prices
- Methods for setting prices like cost-based, demand-based, competition-oriented pricing
- Steps in setting price which include selecting objectives, determining demand, analyzing costs and competition
The document discusses factors that affect price strategy, including costs, supply and demand, competition, and technological trends. It describes different pricing approaches like cost-based pricing, demand-based pricing, and competition-based pricing. It also covers pricing techniques across a product's life cycle from introduction to decline, as well as psychological pricing techniques.
This document discusses various pricing policies, objectives, factors, and strategies. It begins by defining pricing and pricing policy. It then discusses pricing objectives such as profit maximization, satisfactory profits, and market share. It also covers factors that influence pricing like costs, competition, and customer willingness to pay. Finally, it outlines and describes various common pricing strategies such as penetration pricing, skimming pricing, competitive pricing, discount pricing, and bundle pricing.
PRICING
IMPORTANCE OF PRICING
OBJECTIVES OF PRICING DECISIONS
FACTORS AFFECTING THE PRICE DETERMINATION
COSTS OF PRICING
NATURE OF THE MARKET AND DEMAND
The document discusses various pricing methods and objectives that companies consider when setting prices. It identifies the key steps in determining pricing objectives, which include considering financial, marketing and strategic company objectives as well as consumer factors. Some common pricing objectives mentioned are maximizing profit, increasing sales or market share. The document then outlines different methods for setting prices, including based on costs, competition, demand as well as strategic approaches like price skimming, penetration pricing, bundled pricing and cross-subsidization.
price is to set a monetary cost for products and services of financial and ba...MengsongNguon
This document discusses pricing strategies for financial services. It explains that pricing is a complex element of the marketing mix that must balance customer and supplier interests. Several approaches to setting prices are described, including cost-based pricing, market-based pricing, and regulation-based pricing. Specific factors considered for pricing different financial products like savings, investments, credit, and insurance are also outlined. The goal is to select a pricing objective and determine demand in order to optimize profitability while meeting customer needs.
The document discusses various concepts related to price mix and pricing strategies. It defines price and discusses factors that affect pricing, including internal factors like costs, objectives and marketing mix, and external factors like demand, competition and regulations. It then covers different approaches to setting prices, such as cost-based approaches like cost-plus pricing and target return pricing, and demand-based approaches like perceived value pricing. Finally, it discusses pricing strategies such as using the product lifecycle to set prices, increasing or decreasing prices in response to market changes, and strategies for pricing a product mix or line.
This document discusses pricing strategies and how pricing relates to other elements of the marketing mix. It outlines several types of pricing strategies, such as penetration pricing, skimming pricing, and bundle pricing. It also explains how pricing interacts with and must be considered together with the other Ps of the marketing mix: product, promotion, and distribution. The optimal pricing strategy depends on factors like costs, competition, company objectives, and target customers.
This document discusses various managerial accounting concepts related to cost behavior analysis, decision making, and pricing strategies. It defines three types of cost behavior - fixed costs that do not vary with production, variable costs that vary with production, and mixed costs that have attributes of both. Decision making concepts covered include make-or-buy, keep-or-drop, special order pricing, and product mix decisions. Cost-volume-profit analysis and relevant costing are also summarized. Finally, different pricing strategies such as cost-based pricing, value-based pricing, and strategic pricing are defined.
The document discusses pricing strategies and factors to consider when setting prices. It covers internal factors like costs of production and external factors like competition and economic conditions. The major pricing strategies discussed are customer value-based pricing, cost-based pricing, and competition-based pricing. It also discusses strategies for new products, products within a mix, and adjusting prices for different customers. The objectives of pricing are to ensure business survival, improve profitability, and increase sales and market share.
The document discusses pricing strategies and psychological pricing. It provides an overview of different pricing methods like cost-based pricing, customer-based pricing, competitor-based pricing, premium pricing, penetration pricing, economy pricing, price skimming, product line pricing, optional product pricing, predatory pricing, value pricing, product bundle pricing, geographical pricing, and cost-plus pricing. It also discusses objectives of pricing and the steps to develop pricing for a new product. Finally, it explains psychological pricing as a strategy that uses techniques like odd pricing and prestige pricing to psychologically impact consumers.
This document discusses various pricing strategies and methods. It covers:
1. Defining price and the factors that affect pricing like costs, demand, competition.
2. Different cost-based pricing methods like cost-plus and target return on investment.
3. Value-based methods like perceived value and customer value pricing.
4. Competition-based methods like going-rate, pricing above/below competitors.
5. Other strategies like price lining, product life cycle pricing, and responding to price changes.
The document outlines various steps and strategies for setting prices, including:
1) Determining pricing objectives, studying costs and demand, and monitoring competitors' prices.
2) Common pricing strategies are cost-oriented pricing, demand-oriented pricing, and competition-oriented pricing.
3) Specific pricing techniques include promotional pricing, variable pricing, price lining, and psychological pricing.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
The document discusses factors that affect price strategy, including costs, supply and demand, competition, and technological trends. It describes different pricing approaches like cost-based pricing, demand-based pricing, and competition-based pricing. It also covers psychological pricing techniques, calculating markups and discounts, and considerations for updating price strategy.
The document discusses pricing strategies and methods. It identifies key determinants for pricing like objectives, costs, competition and demand. It explores different pricing methods like cost-based, demand-based and competition-based pricing. Legal/regulatory factors and how pricing fits into the overall marketing mix are also addressed.
The document discusses various aspects of pricing strategy and methods. It defines pricing strategy as a plan for setting prices that considers factors like costs, competition, and demand. Some key determinants in setting prices are organizational objectives, costs, competition, and buyers' perceptions. Common pricing methods include cost-based pricing, demand-based pricing, and competition-based pricing. A company's pricing policy guides its overall pricing approach and specific pricing methods are then used to set prices regularly.
This document discusses various pricing techniques businesses can use to set product prices, including cost-based pricing, demand-based pricing, competition-based pricing, and affordability-based pricing. It also identifies key internal factors like marketing objectives and costs, and external factors like elasticity of demand, government regulation, and customer expectations that affect pricing decisions.
The document discusses developing pricing strategy and provides information on:
- Factors that influence pricing like costs, demand, competition
- Common pricing mistakes like not adjusting for market changes
- Consumer psychology related to pricing like reference prices
- Methods for setting prices like cost-based, demand-based, competition-oriented pricing
- Steps in setting price which include selecting objectives, determining demand, analyzing costs and competition
The document discusses factors that affect price strategy, including costs, supply and demand, competition, and technological trends. It describes different pricing approaches like cost-based pricing, demand-based pricing, and competition-based pricing. It also covers pricing techniques across a product's life cycle from introduction to decline, as well as psychological pricing techniques.
This document discusses various pricing policies, objectives, factors, and strategies. It begins by defining pricing and pricing policy. It then discusses pricing objectives such as profit maximization, satisfactory profits, and market share. It also covers factors that influence pricing like costs, competition, and customer willingness to pay. Finally, it outlines and describes various common pricing strategies such as penetration pricing, skimming pricing, competitive pricing, discount pricing, and bundle pricing.
PRICING
IMPORTANCE OF PRICING
OBJECTIVES OF PRICING DECISIONS
FACTORS AFFECTING THE PRICE DETERMINATION
COSTS OF PRICING
NATURE OF THE MARKET AND DEMAND
The document discusses various pricing methods and objectives that companies consider when setting prices. It identifies the key steps in determining pricing objectives, which include considering financial, marketing and strategic company objectives as well as consumer factors. Some common pricing objectives mentioned are maximizing profit, increasing sales or market share. The document then outlines different methods for setting prices, including based on costs, competition, demand as well as strategic approaches like price skimming, penetration pricing, bundled pricing and cross-subsidization.
price is to set a monetary cost for products and services of financial and ba...MengsongNguon
This document discusses pricing strategies for financial services. It explains that pricing is a complex element of the marketing mix that must balance customer and supplier interests. Several approaches to setting prices are described, including cost-based pricing, market-based pricing, and regulation-based pricing. Specific factors considered for pricing different financial products like savings, investments, credit, and insurance are also outlined. The goal is to select a pricing objective and determine demand in order to optimize profitability while meeting customer needs.
The document discusses various concepts related to price mix and pricing strategies. It defines price and discusses factors that affect pricing, including internal factors like costs, objectives and marketing mix, and external factors like demand, competition and regulations. It then covers different approaches to setting prices, such as cost-based approaches like cost-plus pricing and target return pricing, and demand-based approaches like perceived value pricing. Finally, it discusses pricing strategies such as using the product lifecycle to set prices, increasing or decreasing prices in response to market changes, and strategies for pricing a product mix or line.
This document discusses pricing strategies and how pricing relates to other elements of the marketing mix. It outlines several types of pricing strategies, such as penetration pricing, skimming pricing, and bundle pricing. It also explains how pricing interacts with and must be considered together with the other Ps of the marketing mix: product, promotion, and distribution. The optimal pricing strategy depends on factors like costs, competition, company objectives, and target customers.
This document discusses various managerial accounting concepts related to cost behavior analysis, decision making, and pricing strategies. It defines three types of cost behavior - fixed costs that do not vary with production, variable costs that vary with production, and mixed costs that have attributes of both. Decision making concepts covered include make-or-buy, keep-or-drop, special order pricing, and product mix decisions. Cost-volume-profit analysis and relevant costing are also summarized. Finally, different pricing strategies such as cost-based pricing, value-based pricing, and strategic pricing are defined.
The document discusses pricing strategies and factors to consider when setting prices. It covers internal factors like costs of production and external factors like competition and economic conditions. The major pricing strategies discussed are customer value-based pricing, cost-based pricing, and competition-based pricing. It also discusses strategies for new products, products within a mix, and adjusting prices for different customers. The objectives of pricing are to ensure business survival, improve profitability, and increase sales and market share.
The document discusses pricing strategies and psychological pricing. It provides an overview of different pricing methods like cost-based pricing, customer-based pricing, competitor-based pricing, premium pricing, penetration pricing, economy pricing, price skimming, product line pricing, optional product pricing, predatory pricing, value pricing, product bundle pricing, geographical pricing, and cost-plus pricing. It also discusses objectives of pricing and the steps to develop pricing for a new product. Finally, it explains psychological pricing as a strategy that uses techniques like odd pricing and prestige pricing to psychologically impact consumers.
This document discusses various pricing strategies and methods. It covers:
1. Defining price and the factors that affect pricing like costs, demand, competition.
2. Different cost-based pricing methods like cost-plus and target return on investment.
3. Value-based methods like perceived value and customer value pricing.
4. Competition-based methods like going-rate, pricing above/below competitors.
5. Other strategies like price lining, product life cycle pricing, and responding to price changes.
The document outlines various steps and strategies for setting prices, including:
1) Determining pricing objectives, studying costs and demand, and monitoring competitors' prices.
2) Common pricing strategies are cost-oriented pricing, demand-oriented pricing, and competition-oriented pricing.
3) Specific pricing techniques include promotional pricing, variable pricing, price lining, and psychological pricing.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
IMPACT Silver is a pure silver zinc producer with over $260 million in revenue since 2008 and a large 100% owned 210km Mexico land package - 2024 catalysts includes new 14% grade zinc Plomosas mine and 20,000m of fully funded exploration drilling.
Zodiac Signs and Food Preferences_ What Your Sign Says About Your Tastemy Pandit
Know what your zodiac sign says about your taste in food! Explore how the 12 zodiac signs influence your culinary preferences with insights from MyPandit. Dive into astrology and flavors!
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...APCO
The Radar reflects input from APCO’s teams located around the world. It distils a host of interconnected events and trends into insights to inform operational and strategic decisions. Issues covered in this edition include:
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...my Pandit
Dive into the steadfast world of the Taurus Zodiac Sign. Discover the grounded, stable, and logical nature of Taurus individuals, and explore their key personality traits, important dates, and horoscope insights. Learn how the determination and patience of the Taurus sign make them the rock-steady achievers and anchors of the zodiac.
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....Lacey Max
“After being the most listed dog breed in the United States for 31
years in a row, the Labrador Retriever has dropped to second place
in the American Kennel Club's annual survey of the country's most
popular canines. The French Bulldog is the new top dog in the
United States as of 2022. The stylish puppy has ascended the
rankings in rapid time despite having health concerns and limited
color choices.”
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
Building Your Employer Brand with Social MediaLuanWise
Presented at The Global HR Summit, 6th June 2024
In this keynote, Luan Wise will provide invaluable insights to elevate your employer brand on social media platforms including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok. You'll learn how compelling content can authentically showcase your company culture, values, and employee experiences to support your talent acquisition and retention objectives. Additionally, you'll understand the power of employee advocacy to amplify reach and engagement – helping to position your organization as an employer of choice in today's competitive talent landscape.
3 Simple Steps To Buy Verified Payoneer Account In 2024SEOSMMEARTH
Buy Verified Payoneer Account: Quick and Secure Way to Receive Payments
Buy Verified Payoneer Account With 100% secure documents, [ USA, UK, CA ]. Are you looking for a reliable and safe way to receive payments online? Then you need buy verified Payoneer account ! Payoneer is a global payment platform that allows businesses and individuals to send and receive money in over 200 countries.
If You Want To More Information just Contact Now:
Skype: SEOSMMEARTH
Telegram: @seosmmearth
Gmail: seosmmearth@gmail.com
How to Implement a Real Estate CRM SoftwareSalesTown
To implement a CRM for real estate, set clear goals, choose a CRM with key real estate features, and customize it to your needs. Migrate your data, train your team, and use automation to save time. Monitor performance, ensure data security, and use the CRM to enhance marketing. Regularly check its effectiveness to improve your business.
How MJ Global Leads the Packaging Industry.pdfMJ Global
MJ Global's success in staying ahead of the curve in the packaging industry is a testament to its dedication to innovation, sustainability, and customer-centricity. By embracing technological advancements, leading in eco-friendly solutions, collaborating with industry leaders, and adapting to evolving consumer preferences, MJ Global continues to set new standards in the packaging sector.
Structural Design Process: Step-by-Step Guide for BuildingsChandresh Chudasama
The structural design process is explained: Follow our step-by-step guide to understand building design intricacies and ensure structural integrity. Learn how to build wonderful buildings with the help of our detailed information. Learn how to create structures with durability and reliability and also gain insights on ways of managing structures.
2. Content
Preface
Levels of price management
Methodology of pricing
Methods of pricing
Cost-based pricing
Demand-based pricing
Other methods of pricing
Conclusion
3. Preface
In the world market prevail various methods
of price setting.
In this respect, one of the major issues is
becoming analyzing of pricing methods in
order to evaluate one’s decision and take
appropriate actions.
4. Levels of price management
There are three levels of price management:
Industry strategy;
Product/market strategy;
Transaction.
5. Price level: Industry strategy
Industry strategy is the first level in the price
management. It considers the influence of supply,
demand and cost dynamics to the overall industry
price level.
Excellence in industry requires not only in-depth
knowledge of your own company and how your
actions will affect market prices, but also the feature
of competition.
Capacities, cost structures, capital investments,
research and development expenditures and growth
aspirations of other companies are the key part of
this overall strategy.
6. Price level: Industry strategy
Bringing all this knowledge together, companies
can anticipate industry price trends and become
proactive with regard to its operations rather than
just a pawn of the market “invisible hand”.
They can adjust their tactics to take advantage of
this superior understanding.
7. Price level: product/market strategy
At the second level of price management, a
primary issue is price positioning relative to
competitors. That is, within each market
segment that one serves, what price level
positions he or she occupies in customer’s
eyes.
Price actions at this level tends to be quite
visible to the market, both to customers and
competitors.
8. Price level: product/market strategy
At this level one is setting the following prices:
“List prices” – is a basic published price or
advertised price;
“Base prices” – is the initial price of something
(goods and services) without the additional
changes that may be added, such as handling
or transportation costs, sales tax and so on;
“Target prices” – is a price that would result in
the best possible outcome for one’s investment.
It is the price at which a stockholder is willing to
sell his or her stock.
9. Price level: transaction
Transaction – is the process based on which
goods, services, or money are passed from
one person, account to another one.
At this level, a critical issue is how to manage
the exact price charged for each transaction.
The objective of transaction management is
to achieve the right and best realized price for
each transaction.
10. Transaction: off-invoice and
pocket price
Invoice price - is the price that appears on
the invoice that a manufacturer sends to a
dealer when a dealer receives a car from the
factory.
Pocket price – the revenues that are actually
left in a company’s pocket from a transaction
to cover costs and contribute to profit.
Pocket price = invoice price-invoice off price.
11. Transaction: off-invoice prices
Annual volume discount-an end year bonus paid to customers.
Cash discount-a deduction from the price if payment is made quickly.
Online order discount-a discount offered to customers ordering over the
internet.
Consignment costs-the costs of funds when a supplier provides consigned
inventory to a retailer and wholesaler. Consignment is a business arrangement,
in which a business, also referred to as a consignee, agrees to pay a seller, or
consignor, for merchandise after the item sells.
Market-development funds-a discount to promote sales to a specific market
segment.
Stocking allowance-a discount paid to wholesalers or retailers to make large
purchases into inventory.
12. Methodology of pricing
Methodology of pricing - is the sum of
common rules, principles and methods. It
involves elaboration of pricing concept,
definition and assessment of pricing,
formulating of a price system, management of
prices.
Through the methodology is developed a
pricing strategy, whereas methods include
recommendations and instruments for the
realization on this strategy in the practice.
13. Methods of pricing
Currently, there are
different kinds of
price methods used
by firms. Based on
these methods firms
compare their costs
and profits.
14. Methods of pricing
Pricing methods - are
the various tools of price
formation.
Prices are based on three
dimensions that are costs,
demand and competition.
The organization can use
any of the dimensions,
whereas combination of
dimensions in order to set
the price of product.
15. Pricing methods
Cost-based pricing;
Demand-based pricing;
Value pricing;
Target return pricing;
Transfer pricing;
Going-rate pricing;
Competition-based pricing;
Other pricing methods.
16. Pricing methods
In order to set relevant
price the seller should
analyze the prices of
competitors, internal and
external factors.
Based on these factors
the seller should choose
the appropriate pricing
method.
18. Cost-based pricing
Cost-based pricing refers to a pricing method
in which some percentage (total cost) of
desired profit margin is added to the cost of
a product in order to obtain the final price
(selling price).
Cost-based pricing can be of three types:
cost-plus pricing;
mark-up pricing;
marginal-cost pricing.
19. Cost-plus pricing
Cost-plus pricing method refers to the
simplest method of determining the price of a
product. In cost-plus pricing method, a fixed
percentage, also which is called a mark-up
percentage, of the total cost is added to the
total cost.
Cost-plus pricing method is also known as an
average cost pricing.
This is the most commonly used method in
manufacturing organizations.
20. Cost-plus pricing
The pricing method based on full expenses
includes all expenses during the production a
commodity.
This method allows one to set a price limit.
21. Cost-plus pricing
Advantages
Requires minimum
information.
Involves simplicity of
calculation.
Insure sellers against
the unexpected
changes in costs.
Disadvantages
Ignores price strategies of
competitors.
Ignores the role of
customers.
Much more oriented to
the production and less to
the market.
22. Mark up pricing
Mark up pricing is
more common in the
retail industry in which
retailer sells a product
in order to earn profit.
Mark up as a
percentage of
cost=(markup/cost)*1
00
Mark up as
percentage of
selling
price=(Markup/selling
price)*100
23. Mark up pricing calculation
Mark up Selling price=$500
Cost =$400
Mark up as a % of selling price (100/500)*100=20
Mark up as a % to cost (100/400)*100=25
24. Marginal cost pricing
Marginal cost pricing is the process of setting
an item's price at the same level as the extra
expense involved in producing another item.
This method is useful in a specific situation
where a company can earn additional profits
from using up an excess production capacity.
25. Cost-based pricing: example 1
Company A Company B
Direct cost 370 340
Raw materials 55 45
Wage expenses 105 95
Other direct costs 210 200
Indirect costs 100 100
Total cost 470 440
Rentability (to expenses) 15% 12%
Profit 70 53
Price of product 540 493
26. Cost-based pricing: example 2
If the operational cost of the store accounts for 8 $, the net profit of
the wholesaler will be 2 $.
For example, if the wholesaler purchases a product for 20 $ and sells
it to for 30 $ he or she will gain 10 $ of profit
(50% addition to the price).
27. Cost based pricing
The price OP is made up of three elements: average
fixed cost, average variable cost and a profit margin.
28. Demand-based pricing
Demand-based pricing refers to a pricing
method in which the price of product is
finalized according to its demand.
If the demand of a product is more, an
organization prefers to set high prices for
products to gain profit.
Success of demand-based pricing depends
on the ability of marketers to investigate the
demand.
29. Demand-based pricing
The named method
of pricing can be
used in the travelling
industry.
To take an example,
airlines in a period of
low demand charge
less rates as
compared to a period
of high demand.
30. Competition-based pricing
Competition-based pricing refers to a
method in which an organization considers
the price of competitors’ products to set the
prices of its own products.
The organization may charge higher, lower,
or equal prices as compared to the prices of
its competitors.
An aviation industry is the best example of
competition-based pricing, where airlines
charge the same or fewer prices for the same
routes as charged by their competitors.
31. Sealed bid pricing
Sealed bid pricing is based on how the firm
considers competitors will price their products
rather than only on its own costs or demand.
In this pricing method firms go for competitive
bidding through sealed tenders or quotations.
Firms look for the best (lowest possible) price
consistent with minimum quality specification.
32. Value pricing
Value pricing implies a method in which an
organization tries to win loyal customers by
charging low prices for their high quality
products.
The organization aims to become a low cost
producer without sacrificing the quality.
33. Value pricing
It can deliver high-
quality products at
low prices through
improving its rese-
arch and develop-
ment process.
Value pricing is also
called value opti-
mized pricing.
34. Perceived-Value Pricing
In perceived-value pricing a firm sets price
based on a customer’s perception of goods
and services taking into account all the
elements such as advertising, promotional
tools, product quality and other that influence
a customer’s perception.
36. Target-return pricing
Target return pricing helps in achieving the
required rate of return on investment done for
a product. In other words, a price of a product
is fixed on the basis of expected profit.
The target return price can be calculated as:
Target return price = unit cost + (desired
return * invested capital) / unit sale.
37. Return Investment
Return on investment (ROI) is the benefit to
an investor resulting from an investment of
some resource.
38. Target-return pricing calculation
Suppose a TV manufacturer invested 1 million
dollars in a business and wants to set a price
to earn a 30% ROI. The manufacturing cost of
per TV is 20$. Assuming that the sales can
reach 50,000 units.
Target return price will be = 20 + (0.3 *
1000000)/ 50,000 = 26$
39. Transferring prices
Transferring prices involves selling of good
and services within the departments of the
organization. It is done to manage the profit
and loss ratios of different departments within
the organization.
One department of an organization can sell
its products to other departments at a low
prices.
40. Going-rate pricing
Going-rate price implies a method in which
an organization sets the price of a product
according to the prevailing price trends in the
market.
In most cases the pricing decisions adopted
by an organization can be the same or similar
to other organizations.
41. Breakeven pricing
Breakeven pricing -associated with breakeven
analysis, which is a forecasting tool used by
marketers to determine how many products
must be sold before the company starts
realizing a profit.
42. Breakeven pricing
For instance, assume a company operates a single-
product manufacturing plant that has a total fixed cost
(e.g., purchase of equipment, mortgage, etc.) per
year of $3,000,000 and the variable cost (e.g., raw
materials, labor, electricity, etc.) is $45.00 per unit. If
the company sells the product directly to customers
for $120, it will require the company to sell 40,000
units to breakeven.
B/E pricing=
43. Breakeven pricing
The calculation presented above is a measure of units that need
to be sold. Clearly it is easy to turn this into a Revenue
Breakeven Analysis by multiplying the units needed by the
selling price. In our example, 40,000 units x $120 =
$4,800,000).
44. Price leadership method
Price leadership prevail in the case when a
firm that is the leader in its sector determines
the price of goods or services and others
follow this price.
These methods are practiced in the markets
where prevail several firms. The firm with
high market shares takes initiative.
45. Stackelberg price leadership
Stackelberg price leadership assumes that
one firm has knowledge or foresight of its
competitor’s reaction to its price policies.
As a result, the firm may credibly announce a
price in anticipation of competitor’s reaction.
Stackelberg price leader benefits from this
foresight and is normally better off than in the
simultaneous game.
46. Tender price methods
Tender usually refers to the process whereby
governments and financial institutions invite
bids for large projects that must be submitted
within a finite deadline.
Tender price methods-are used in the cases
when several firms have serious competition
for obtaining contract.
47. Auction type pricing
Auction type pricing method is growing
popular with the more usage of the internet.
Several online sites such as eBay provides a
platform to customers where they buy or sell
the commodities.
48. Parametric methods of pricing
Unit price method - price formation based on one of
the major quality characteristics of a commodity.
Pricing method of bands - refers to the use of
expert valuations of the significance of products. It
involves using of bands in the process of basic
parameters of a product.
Regressive analysis method - is based on the
technical-economic parameter of a product. One can
built here also correlation dependence.
Aggregate methods - refers to the summing of
separate constructive parts of products.
49. Summary
Pricing methods are common tools and
procedures used on the world market by
producers and manufacturers.
Based on pricing methods entrepreneurs
formulate their tactics with regard to the
products and services.