Pricing- Part Deux

Chapter 20

Pricing ProcessIdentify Pricing Constraints

Estimate Demand and Revenue

Determine Cost, Volume, & Profit Relationships

Select an Approximate Price Level

Set List/Quote Price

Make Special Adjustments to List/Quoted Price

Step 4: Select an Appropriate Price Level

Demand-Oriented Cost-Oriented Profit-Oriented Competition-Oriented

Demand-Oriented

Price Skimming Penetration Pricing Prestige Pricing Price Lining Odd-Even Pricing Target Pricing Bundle Pricing Yield Management

Pricing Source: http://www.clker.com/clipart-125655.html

Cost-Oriented

Standard Mark-up Pricing

Cost-Plus Pricing Experience Curve

Pricing

Profit-Oriented

Target Profit Pricing Target Return on Sales Pricing Target Return-on-Investment Pricing

Competition-Oriented Pricing

Customary Pricing Above-, At-, or Below-market Pricing Loss-Leader

Step 5: Set the List or Quoted Price

One-Price v. Flexible-Price Policy

Effects Company

Product-line pricing Customer effects

Perceptions Competitive

Price warSource: http://www.clker.com/clipart-price-tag.html

Step 6: Make Special Adjustments to the List or

Quoted Price Discounts

Quantity Discounts Seasonal Discounts Trade (Functional) Discounts

$100 less 25/20/10 Cash Discounts

$1,000 2/10 net 30

Step 6: Make Special Adjustments to the List or

Quoted Price Allowances

Trade-in Allowances Promotion Allowances

EDLP

Step 6: Make Special Adjustments to the List or

Quoted Price Geographical Adjustments

FOB Origin Pricing Uniform Delivered Pricing

Single-Zone Pricing Multiple-Zone Pricing Freight Absorbed Pricing Basing-Point Pricing

Legal Issues

Price fixing Price discrimination Deceptive pricing Geographical pricing Predatory pricing