Pricing

Pricing strategy is a method adopted by a business to set the desired selling price. It typically depends on the firm’s average costs, and on the customer’s perceived market value of the product in comparison to their perceived value of the competitors’ products. Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation (Business Dictionary, 2016). Understanding and getting pricing right contributes…

You Do: how might you use psychological pricing to increase sales of your product or service Video: Psychological Pricing (embed video) Team do: 1. What philosophy governs supermarket psychology today? 1. Shortcuts to the wallet. 2. What is the impact of the word “special”? 1. Psychological process: special=good 2. Scarcity effect: on special=only for short time 3. What is the impact of packaging? 1. Packaging confirms concept of quality=high price…

Wine pricing strategy Businesses use various strategies in calculating the price of a product or services. These various methods of establishing the price of a commodity are referred to as pricing strategies. A commodity or service’s price can be set with an objective of maximizing profit related with each unit or the price of the commodity can be sold at market price (Smith, 2012). A business can lower or even increase the price of a commodity; this is done in relation to customers’ behavior…

Profit-Oriented Pricing Objectives - Return on Investment (ROI) ROI is the amount of profit a firm hopes to make from their investment. Often firms set a certain ROI percentage amouhnt, which it hopes will be earned over a product’s launch year. For example, if I were to invest $20,000 into a Silicon Valley start-up at 10% expected ROI, I would hope to see $2,000 in profits a year after the start-up’s product was launched. - Maximizing Profits When a firm cuts costs or encourages customer…

is a good managerial decision to do channel pricing. There are many factors that must be considered when do channel pricing. The first is to determine the price that is desired for the end consumer of the product. This price will help determine the amount of channels that will be used in order to reach the end user. This will also help determine the pricing structure through each distribution channel. The second factor is to determine the channel pricing with the considerations of other…

Pricing Cues The textbook author included a case about the different pricing cues. While reading this case I learned that prices ending in 9 not only show signs of a bargain but it can also increase demand. The case author says in one study involving women’s clothing, raising the price of a dress from $34 to $39 actually increased demand by a third. I did not know raising a price could also increase sells, I guess that’s the power of 9. On page 318, there is a table showing the different…

Values Based Pricing Utpal Dholakia writes a piece for the Harvard Business Review (HBR) about how to simply calculate the price of merchandise utilizing a Values Based Model. Utpal explains that many of his MBA students have the hardest time grasping the concept of Value Based Pricing, he proceed to break it down into 1 simple sentence. He uses a simple definition: “Value-based pricing is the method of setting a price by which a company calculates and tries to earn the differentiated worth of…

Question 2 Penetration Pricing: a Penetration pricing strategy is the strategic application practice of settling an initial price that is far lower than the projected standard price for the product. The strategy is essentially also know as a price war. This strategy goes for the lowest and deepest price cut, to ensure that the product at any given time in the market has the lowest price compared to its competitors. The business would only use this strategy if they need an exceptionally low price…

8. Pricing Strategy In order to get a better profit in Vietnam, the pricing strategy that will be used to market portable home theater glasses is price skimming strategy. Since our product categorized as a new product, we want to set a relatively high price for our product to make the people in Vietnam will have a good perception towards our product’s quality. In addition, when there are some competitors that will enter the Vietnamese market with the same product but having a lower price, the…

external factors affect determination of pricing method adopted by any organisation. Internal factors that pricing are organisational factors, marketing mix, product differentiation, cost of the product and objectives of the firm. External factors that influence pricing decisions are demand, competition, suppliers, economic conditions, buyers and government. Internal Factors • Organisational Factors The organisation is usually divided into two levels where the pricing decisions take place. The…