Price and costing 1st Reviewer

Price

The set amount that customer has/have to pay to purchase a product.

Cost based pricing, perceived Value pricing, Competitive pricing.

What are the pricing approaches

Cost-Based pricing

Fixed and variable cost sre determined as the basis of the selling price, adding the mark-up to arrive in the price.

Variable Costs

Direct expenses on materials and labor that are utilized in the production

Fixed Cost

Expenses which firms cannot do away with regardless of production volume.

Core, Actual, Augmented

Three levels of a product

Competitive Pricing

Prices of goods are baded kn the competitors prices on the same goods.

More than >

Same as =

Less than <

How to set competitive pricing

Comparative, BOGOF, Charm pricing

3 types of price psychology

Comparative pricing

Placing expensive net to standard.

Charm Pricing

Reduce the lrft digit by centavos

Product bundle pricing, psychology pricing, market penetration pricing, market skimming, elasticity of demand, product line pricing, main, product pricing, optional pricing.

What are the other pricing consideration?

PBP, PP, MPP, MS, EoD, PLP, MPP, OP

Product Bundle Pricing (PBP)

Individual products are put together to create one whole product.

Psychology Pricing

Based on theory that certain prices have a behavioral impact towards customer purchases.

Market Penetration Pricing (MPP)

A low initial price is set to attract a customer, improve sales of eventually eliminate competition.

Market Skimming (MS)

Involes setting a high price for a product to gain as much profit as possible before the number of competitors for the same product increases.

Elasticity of demand

Prices are affected by the relationship between consumer demand and the changes in the price of goods.

Product Line pricing

Involves the separation of goods and their variation into categories by vreating price gaps to emphasize differences in quality.

Main Product Pricing (MPP)

Is charged a lower price but additional charges go with it

Optional Pricing (OP)

Additional prices are paid to avail added feature

Risk Capital

There is a substantial element of risk but expect a high return, typically a new or expanding business.

Informal risk capital

Business provides source of capital from other investors. Also known as Angels capital and venture capitalist

Inflation

Occurs when there is an increase in the overall price level of goods and services in the economy.

Deflation

Occurs when there is an decrease in the overall price level of goods and services in the economy.

Housing, apparel, transportation, education and communication, other goods and services, recreation, medical care, food and beverages.

8 major groups of the consumer price index

Consumer price index

What is CPI

Fiscal policy

Is the strategic use of taxation and government spending to decrease inflation rate.

Monetary policy

Set of action by BSP in controlling nation’s money supply and wcheive economic growth

Direct measures

Impose action towards price of goods and services

Cost push inflation, and demand pull inflation

2 types of inflation

Cost push inflation

Substantial increase in the cost of important goods and services where no suitable alternative is available

Demand pull inflation

High demand for goods and low employment