Studied by 0 peopleSetting Prices
taking into consideration steps and procedures to form a price
Cost-plus pricing
5 Common Pricing Strategies:
most common pricing strategy
calculate your cost, then add your mark-up
add all contributing factors for one unit + desired mark-up percentage
Competitive Pricing
setting your price based on your competitor's price
make sure to know your competitors' prices can make necessary price adjustments
Co-operative Pricing
3 Approaches When Adjusting Prices
you match your competitor's price
when your competitors increase their prices you also increase yours, and vice versa
Aggressive Pricing
3 Approaches When Adjusting Prices
stubborn stance
when competitors increase, you don't increase yours
when competitors decrease their prices, you decrease yours more than theirs
makes sure that you have a lower price to attract customer
Dismissive Pricing
3 Approaches When Adjusting Prices
you must be leading the market - it could be that you offer something unique or the best service/product that everyone wants
you have the power to set the price as long as you are the only one to offer this product to the market
Price Skimming
product innovation leads to more competitors
Market Penetration
the opposite of price skimming
consumer attraction
build customer loyalty
Value-based Pricing
value perception
Product Mix Pricing Strategy
when the firm seeks a set of prices where the products should always be determined with the product mix in mind, plus the prices must optimize its profitability on the product mix available
Product Line Pricing
this is setting process across an entire product line
firms usually categorize goods and services to generate different perceived quality levels in the minds of consumers
various products are priced within the same range of products at different price points
Optional Product Pricing
this is a type of pricing for optional or accessory products that would serve as an addition to a core product itself
however, it is also indeed challenging for companies to decide which of the products should be priced the lowest and which should be offered options
Captive Product Pricing
occurs when a company creates goods that must be utilized in conjunction with the main product
the captive product is an essential part of the main product making it useful
By-product Pricing
this is when the company tries to price and sell the byproducts or waste of the primary products
some companies may even convert the garbage into profit
the corporation attempts to offset the expense of disposing of byproducts to make the price of the primary product more competitive
Product Bundle Pricing
companies use this to mix many products and offer the bundle at a lower price
this strat is often used by fast food chains, and they do this so that the business can enhance the sales of an unpopular product with their popular product
Discount and Allowance Pricing
Seven Types of Price Adjustment Strategies
discounts can be granted as a cash discount, a price reduction to buyers who pay their bills promptly
a quantity discount, or price reduction, can also be offered to customers who make significant purchases
the third type of discount is a seasonal account, which lowers the price for customers who purchase goods or services out of season
Segmented Pricing
Seven Types of Price Adjustment Strategies
under location-based pricing, firm charges different prices for different locations, although the cost of offering each location is the same
under time-based pricing, the business changes its prices according to the day, the season, the month, and even the hour
Psychological Pricing
Seven Types of Price Adjustment Strategies
refers to pricing that takes into account price psychology as well as economics
this does not, however, last forever; price is less frequently used to evaluate quality when customers may examine a product or rely on prior experience with it
Promotional Pricing
Seven Types of Price Adjustment Strategies
necessitates temporarily selling things below the list price and occasionally even below cost
could take the form of discounts from normal prices to increase sales and reduce inventories
price promotions have the potential to turn people into markdown shoppers if they are utilized too frequently and replicated by other businesses
FOB-origin Pricing
Five Types of Geographical Pricing:
since items are loaded onto a ship for free, the cost of shipping them from the production to the destination falls on the client
Uniform-delivered Pricing
Five Types of Geographical Pricing:
no matter where the consumer is located this business charges te same amount plus freight
Zone Pricing
Five Types of Geographical Pricing:
each consumer inside a zone pays the same amount; however, the price increases with distance
Base-point Pricing
Five Types of Geographical Pricing:
the supplier chooses a base point city and bills all the consumers for freight from that base point location
Freight-absorption Pricing
Five Types of Geographical Pricing:
the seller absorbs all or part of the freight charges to get desired business
Dynamic Pricing
the practice of constantly modifying prices to match the characteristics and needs of particular customers and scenarios
historically, prices were usually decided by negotiation between buyers and sellers
the pricing was tailored to the unique consumer or situation
instead of set prices, prices are modified on a daily, or even hourly basis, taking into account several variables such as current demand, stocks, and costs
International Pricing
companies that sell their goods globally must choose the pricing to change in the various markets where they do business
depends on a variety of variables, including the state of the economy, market conditions, legal and regulatory frameworks, and the evolution of the system for wholesale and retail trade
costs of selling in another country, including the extra costs of operations, product adjustments, shipping and insurance, import levels and taxes, and even exchange-rate swings
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