1 / 8

Pricing Strategies

Pricing Strategies. Part of the Marketing Mix (Product, Price, Place, Promotion). Cost-Oriented Pricing Producers calculate the COST of making a product, then add preferred profit. Markup Pricing. Cost-Plus Pricing. Commonly used by wholesalers & retailers Expressed as a percentage

dasha
Download Presentation

Pricing Strategies

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Pricing Strategies Part of theMarketing Mix (Product, Price, Place, Promotion)

  2. Cost-Oriented PricingProducers calculate the COST of making a product, then add preferred profit Markup Pricing Cost-Plus Pricing • Commonly used by wholesalers & retailers • Expressed as a percentage • Ex: We want to make a 20% profit on this item • Item costs $10 to make • We charge $12 to buy it • 10 * 1.2 = 12 • Ex: Product sells for $175 & costs us $75 • What is the markup? • 175 – 75 = 100 • 100/75 = 1.33 = 133% • Let’s check it backwards • Commonly used by manufacturers & service businesses • Expressed as a $ amount • Example • Job costs $200 to perform • Add $100 as profit • Charge $300 to the client • 200 + 100 = 300

  3. Demand Oriented Pricing (Target Pricing)What are consumers willing to spend on a product or service? Price is set in relation to the perceived value of the product/service

  4. Law of Demand • How many of you would pay $400 for iPhone 4S? • Raise your hand • How many of you would buyone for $50? • Raise your hand • The higher the price, the lowerthe demand • The lower the price, the higherthe demand

  5. Psychological Pricing Based on the theory that certain prices have a psychological impact Retail prices expressed as "odd prices“ or a little less than a round number • Examples • $7.99 vs. $8.00 • $19.99 vs. $20.00 • $199 vs. $200

  6. Competition-Oriented PricingThree Possible Actions

  7. Pricing Policies & Product Life CycleIntroducing a new product

  8. Non-Price Competition

More Related