1 / 12

Pricing

Pricing. Essential Questions/ I Can Statements. I CAN explain factors that influence price and identify the four areas of pricing I CAN demonstrate my ability to solve cost plus pricing formulas I CAN apply my knowledge of pricing and competitive advantages to a mock business scenario.

marlin
Download Presentation

Pricing

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

  2. Essential Questions/I CanStatements • I CAN explain factors that influence price and identify the four areas of pricing • I CAN demonstrate my ability to solve cost plus pricing formulas • I CAN apply my knowledge of pricing and competitive advantages to a mock business scenario

  3. What determines Price? • Supply and Demand (covered last class) • Costs • Perceived Value

  4. Areas of Pricing • Cost of goods • Overhead expenses • Distribution costs • Profit margin

  5. Cost of Goods • Costs incurred by a business to produce or purchase goods and services to be sold • Examples: Raw materials & Parts, production machinery, labor, etc.

  6. Overhead Expenses • Costs incurred to run a business • Examples: Maintenance, Accounting, Advertising, Rent &Utilities, Insurance, Management Salaries, etc.

  7. Distribution Costs • Costs incurred to distribute goods and services • Examples: Packaging, Storage, Shipping, Channels of Distribution

  8. Profit margin • The amount of money charged above costs & expenses • Factors that effect profit margin: Markups, discounts, competition, supply & demand

  9. Pricing Based on Cost (Markup) • Basic Pricing Formula: • COST + MARKUP = RETAIL PRICE • Complete Cost Method Pricing Worksheet (group activity)

  10. Pricing Based on Value • Products that are valued highly can be set at a high price (think back to supply and demand) • Pharmaceuticals (Health) • Rolex (Image) • Reference pricing • Vaseline lip balm • Water bottles

  11. Michael Porter’s Competitive Advantage • Cost Leadership-focuses on providing goods at the lowest possible price to consumers • Cost plus pricing • Ex: Wal-mart • Differentiation-focuses on providing the best or most unique goods to consumers • Value Pricing • Ex: Rolex • Focus-focuses on providing goods to the small segment of consumers whose wants are not being met by general industry • Cost plus or value pricing • Ex: Gatti’s Pizza (hint: can be combined with either strategy above)

  12. Hot Dog Activity!

More Related