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13 Cards in this Set
- Front
- Back
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Pricing Decisions are important in the U.S because of ?
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Administered pricing..aka set prices vs. participated pricing, where you haggle.
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What is the purpose of price?
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To capture the value of the product in the consumers mind
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Pricing Objectives
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*Sales
-Dollar Revenue -Unit Volume *Profits -Maximization -Satisficing *Market Share *Stability *Social Responsibility |
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Pricing Approaches
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*Cost Based
-Breakeven analysis -Markup *Profit-Based -Target Profit Pricing -Target ROI Pricing *Demand-Based -Skimming/Penetration -Prestige Pricing -Bundle Pricing -Demand-Minus -Chain Markup *Competition-Based -Price Leader/follower -Competitive bid *Value Based -understand use -analyze benefits -Analyze costs -cost/benefit tradeoff |
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Breakeven formula
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(Total Fixed Cots/#units)+unit variable costs
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Formula for Markup Pricing
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p= cost of goods/(100-%markup)/100
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Target Profit Pricing Formula
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p= Total fixed costs+Total variable costs+total profit divided by the total number of units
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Target ROI Pricing Formula
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Total fixed cost+total variable costs +(investmentXROI) divided by the STD. #units
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TARGET PROFIT=
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INVESTMENT X ROI
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General Problems w/ pure cost- and profit-based pricing
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*Internal focus
*Ignores demand, competitive factors *Assumes all that is produced is sold at full price *Fails to account for economies of scale |
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Demand-Minus Pricing Formula
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Whole Sale Price= Retail Price X 100%-% Markup/ 100
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Chain Markup Pricing Formula
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Manufacturers' Price= Retail Price X 100-%Retail Markup divided by 100. Then multiply that by 100-%Distributors Markup divided by 100.
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Critical Strategic Pricing Ratio
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Total Perceived Benefit/price=value
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