6 th Class

1. 6th Class Pricing, Pricing, Pricing But first, Matt Ledoux

3. Consideration (How Consumers view a deal)

4. How a Supplier Views it

5. Things to Think About in Pricing • What price will be • How flexible will you be • What’s level of price over product lifecycle • How transportation costs affect costs (often not thought about)

6. When You Are Marketing, What is Your Goal? Profits? Number of units? Market Share? Other products sold?

7. Another Way To Look At It

8. What Type of Discounts? • Quantity discounts • Cumulative quantity discounts • Seasonal discounts • Rebates • Geographic

9. Pricing Acts To Be Aware of • Wheeler Lea Amendment • Unfair or deceptive acts in Commerce • Primarily price fixing • Robinson Pactman Act • Price discrimination (different buyers, different prices if it injures competition) • Both buyers and sellers guilty if they know • Sherman Anti-Trust • No monopolies or cartels (OPEC)

10. What is Markup? • Percentage of selling price added to selling price to get retail cost

11. What happens to profit?

12. Pricing Example

13. Total Aside. Do you know What you are paying?

14. Breakeven Simple

16. Breakeven Point = Fixed Costs/(Unit Selling Price – VariableCosts) http://www.fast4cast.com/break-even-calculator.aspx

17. What is gross margin? Sales-COGS= Gross Margin What is COGS? (variable costs and fixed costs directly linked to the sale such as material costs, labor, supplier profit, s shipping costs, etc.  Given the cost of an item, one can compute the selling price required to achieve a specific gross margin. For example, if your product costs $100 and the required gross margin is 40%, then Selling Price = $100 / (1 - 40%) = $100 / 0.60 = $166.67

18. Thebreak-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". How do you calculate? Fixed costs: These are costs that are the same regardless of how many items you sell. Rent, insurance and computers, are considered fixed costs since you have to make these outlays before you sell your first item. Variable costs: These are recurring costs that you absorb with each unit you sell. For example, if you were operating a greeting card store where you had to buy greeting cards from a stationary company for $1 each, then that dollar represents a variable cost. As your business and sales grow, you can begin appropriating labor and other items as variable costs if it makes sense for your industry.

19. What is marginal revenue? Change in total revenue that results in the sale of one more unit of product. Marginal Cost? Total cost that results in producing one more unit

20. What’s a loss leader?

21. Types of Pricing… Psychological pricing Demand Backward Pricing Percentage Pricing Negotiated Pricing Bid Pricing