Next is cost-based pricing which is setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk. The company’s costs will be an important element in its pricing strategy. A company’s costs take two forms which are fixed costs and variable costs.  Fixed costs are costs that do not vary with production or sale level while variable costs vary directly with the level of production. Therefore, the sum of the fixed and variable costs for the production will be the total costs. Also, Cost-based pricing does include cost-plus pricing where the price is calculated by adding a standard markup to the manufacturer’s costs.  Cost-Plus Pricing has its own advantages and disadvantages or assumptions mainly because any pricing method that ignores demand and competitor prices is not likely to lead to the best price. 
 

Lastly, competition-based pricing means setting prices based on competitors' strategies, prices, costs, and market offerings. Customers or consumers base their judgments of a product's value on the prices that competitors charge for similar products. Whether the company can charge a higher price depends on customer perception that the company's product or service provides greater value than those of its competitors. Otherwise, the company must find methods to change customer perception to justify a higher price.

2.Discuss the major pricing strategies for new products. Your discussion should include the conditions for each pricing strategy to work efficiently.
The major pricing strategies for new products are marketing-skimming price and marketing penetration price.

Market-skimming price strategy is a method that marketers set high initial prices to “skim” revenue layers from the market. This pricing strategy works efficiently when the product has possessed certain quality and good image which can support the high-setting price, the buyers will accept the product at the price. Besides, the production cost of small volume products cannot be too high that they cancel the benefits of charging more. The high prices will cause competitors shouldn’t be able to enter the market easily and undercut the high price.

Another pricing strategy is market-penetration pricing. Through this method, the marketers will set a low price for the product in its introductory stage in order to attract a large number of consumers and achieve a huge market share. It will be implemented and work efficiently in the condition of lower unit cost which leads to a higher sales volume as well as a sustainable long-term profit. Besides, it can be used when the market is highly sensitive to price, which the low prices can promote good market growth. With the accumulation of production experience, the production cost and distribution cost can be reduced which causes a low product price. Lastly, low prices can reduce actual and potential competition.

-involves adjusting prices continually to meet the characteristics and needs of individual customers and situations 

Advantages: 

companies/industries using this method: 
Example - Eastern European electronics retailer gaining a 4.5% uplift in gross profit after using dynamic pricing, it enabled the retailer not only to increase gross profit but also gain an uplift in other key business metrics, including profit margin and total revenue.