HOW DO COMPANIES SET PRICES INITIALLY?

6 – Step Process

Selecting The Pricing Objective

1. SURVIVAL2. MAXIMUM CURRENT PROFIT

3. MAXIMUM MARKET SHARE

Selecting The Pricing Objective

4. MAXIMUM MARKET SKIMMING5. PRODUCT – QUALITY LEADERSHIP

6. OTHER OBJECTIVES

Demand Prediction

PRICE SENSIVITY ESTIMATING DEMAND CURVES PRICE ELASTICITY OF DEMAND

Estimating Costs

TYPE OF COSTS AND LEVEL OF PRODUCTION

ACCULMULATED PRODUCTION TARGET COSTING

Estimating Costs

Analyzing competitors’ Costs, Prices and Offers

Selecting a Pricing Method

6 Methods

Markup Pricing

Target- Return Pricing

Perceived- Value

Pricing

Value Pricing

Going- Rate

Pricing

Auction- Type

Pricing

Selecting the Final Price

£300

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