PRICING STRATEGIES
MAJOR Pricing Strategies
Cost-Based Pricing
Cost-based pricing setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk
Break-even pricing is the amount of money, or change in value, for which an asset must be sold to cover the costs of acquiring and owning it
Cost-plus pricing adds a standard
markup to the cost of the product
Total costs are the sum of the fixed and variable costs for any given level of production
Variable costs are the costs that vary with the level of production
Fixed costs are the costs that do not vary with production or sales leve
Customer Value-Based Pricing
Uses the buyersʼ perceptions of value, not the sellers cost, as the key to pricing
High-low pricing charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
Value-added pricing attaches valueadded features and services to differentiate offers, support higher prices, and build pricing power
Everyday low pricing (EDLP) charging a constant everyday low price with few or no temporary price discounts
Good-value pricing offers the right combination of quality and good service at a fair price.
Competition-Based Pricing
Consumers will base their judgments
of a productʼs value on the prices that
competitors charge for similar products
Setting prices based on competitorsʼ strategies, costs, prices, and market offerings
Strategies
Price adjustment
Segmented pricing
Psychological pricing
International pricing
Dynamic pricing
Geographic pricing
Promotional pricing
Discount and allowance
Product mix
Product bundle
By-product
Captive product
Optional product
Product line
Skim & penetrate
fundamental aspects
Relevant facts for pricing
Product Costs
costs that are those directly related to the production of a product or service intended for sale
Marketing Strategy, Objectives and Mix
Market and Competition
Customer Perceptions of Value
Price
This is illegal
Predatory pricing
Price maintenance
Price discrimination
Deceptive pricing
Price fixing
The price is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service
