Paige Bergmann by paiber7

Types of Pricing

pnbyellow11 — 2013-04-04 18:14:06 UTC

Demand

pnbyellow11 — 2013-04-04 18:14:14 UTC

Attempt to determine what consumers are willing to pay for specific goods/service Exp.Relies on premises of supply-and-demand theory and demand for elasticity

Cost-oritented

pnbyellow11 — 2013-04-04 18:14:19 UTC

NO relation between cost/demand and price Exp.Determines price for a product based on bids

Competition

pnbyellow11 — 2013-04-04 18:14:25 UTC

Calculate costs of making a product and expenses of doing business

Exp.Add projected profit margin to arrive at price

Adjusting Base Prices

pnbyellow11 — 2013-04-04 18:14:48 UTC

1. Product Mix Pricing Strategies

pnbyellow11 — 2013-04-04 18:14:59 UTC

adjusting prices to maximize the profitability for group of products rather than for just one item

Exp. One product priced low, one priced high

a. Price-lining

pnbyellow11 — 2013-04-04 18:15:09 UTC

sets a limited number of prices for specific groups or lines of merchandise

Exp.$25 for sandals, $45 for casual, $75 for running

b. Optional Product

pnbyellow11 — 2013-04-04 18:15:17 UTC

Prices for accessories or options sold with main product

Exp. Cars

c. Captive Product

pnbyellow11 — 2013-04-04 18:15:25 UTC

Product is priced low, but extras are priced high

Exp. Dogs-need to pay for food

d. By-product

pnbyellow11 — 2013-04-04 18:15:32 UTC

Getting rid of excess materials (priced low) Exp. Wood Chips

e. Bundle Pricing

pnbyellow11 — 2013-04-04 18:15:44 UTC

company offers several complimentary products in a package that is sold at a single price & is cheaper then priced individually

Exp. Computer company includes software

2. Geographic Pricing

pnbyellow11 — 2013-04-04 18:16:35 UTC

price adjustments required because of different shipping agreements

Exp. FOB (Free On Board ) – customer pays shipping

3. International Pricing

pnbyellow11 — 2013-04-04 18:16:45 UTC

Setting prices taking in consideration costs, consumers, competition, laws, reglation, economic conditions, & exchange rates

Exp. Tariffs, economic conditions, exchange rates, shipping

4. Segmented Pricing

pnbyellow11 — 2013-04-04 18:17:39 UTC

two or more different prices for a product, through no difference in cost

Exp. following below

5. Psychological Pricing

pnbyellow11 — 2013-04-04 18:17:45 UTC

help create an illusion for customers

6. Promotional Pricing

pnbyellow11 — 2013-04-04 18:17:55 UTC

sales promotions where in prices are reduced for a short period of time

7. Discounts & Allowances

pnbyellow11 — 2013-04-04 18:18:05 UTC

seller offering reductions from the usual price

a. Buyer Identification

pnbyellow11 — 2013-04-04 18:19:15 UTC

recgonizing buyer's sensitivity to price

Exp. senior citizen/ student discounts

b. Product Design

pnbyellow11 — 2013-04-04 18:19:26 UTC

Diff prices for diff styles

Exp. Red washer may cost more then white

c. Purchase Location

pnbyellow11 — 2013-04-04 18:19:38 UTC

pricing according to where a product is sold and location

Exp. Broadway tickets in New York are more expensive then for on the road somewhere else

d. Time of Purchase

pnbyellow11 — 2013-04-04 18:19:50 UTC

Highs and lows in sale activity

Exp. More long distance calls during business hours

a. Odd-even Pricing

pnbyellow11 — 2013-04-04 18:20:08 UTC

Exp. $2.99 instead of $3.00 - odd means “cheap”; Even means “high quality”

b. Prestige Pricing

pnbyellow11 — 2013-04-04 18:20:21 UTC

sets higher-than-average prices to suggest status and high quality to the customer Exp. Rolls Royce cars; Rolex watches

c. Multiple-unit Pricing

pnbyellow11 — 2013-04-04 18:20:30 UTC

Suggests a bargain to help increase sales volume Exp. 4 cases of pop for $12

d. EDLP (Everyday Low Prices)

pnbyellow11 — 2013-04-04 18:20:34 UTC

low prices set on a consistent basis with no intention of raising them or offering discounts in the future Exp. Walmart

a. Loss Leader Pricing

pnbyellow11 — 2013-04-04 18:22:00 UTC

low cost to draw in customers

Exp. Sumner Theater

b. Special-event Pricing

pnbyellow11 — 2013-04-04 18:22:12 UTC

items reduced in price for short period based on events

Exp. back-to-school sales

c. Rebates & Coupons

pnbyellow11 — 2013-04-04 18:22:26 UTC

store/company using rebates or coupons to get customers to buy their product over the competitions Exp. Menards has lots of rebates

a. Cash Discounts

pnbyellow11 — 2013-04-04 18:23:43 UTC

encourage buyers to pay bills quickly

Exp. 2% discount if payed in ten days

b. Quanity Discounts

pnbyellow11 — 2013-04-04 18:23:59 UTC

offered to buyers of large amounts

Exp. cumulative & non clumliative

c. Trade Discounts

pnbyellow11 — 2013-04-04 18:24:11 UTC

the way manufactures quote prices to wholesaler/retailers

Exp. manufactuer granting wholesaler% discount and retailers % discount from list price

d. Seasonal Discounts

pnbyellow11 — 2013-04-04 18:24:29 UTC

sales outside of purchasing time

e. Allowances

pnbyellow11 — 2013-04-04 18:24:34 UTC

go directly to buyer