WHAT’S IN A PRICE?

Why did Apple select $579 as the retail selling price of the Apple iPad

Air Retina tablet?

IMPLEMENTING AUTOMATED RETAIL: PRICE

PRICEThe cost of a good or service

o an exchange (typically a monetary exchange) in order to obtain something

•The price of goods and services is established to fulfill a successful exchange process with the customer.

o Customer perspective: price is what must be given up in order to get something that they want

o Seller perspective: price is revenue that is gained for a product that leads to profit for the seller

IMPLEMENTING AUTOMATED RETAIL: PRICE

PRICING DECISIONS• Making good pricing decisions is critical to the

success of the business.o If a product is priced too high or too low, it can create a

loss for the business.

• The term price is used interchangeably with the term cost—however, the two are very different. o Price is what a customer pays a seller—usually a retailer.o Cost is what the seller incurs (which may include cost of

production) to obtain the product.

IMPLEMENTING AUTOMATED RETAIL: PRICE

PRICING DECISIONS• Internal Factors: are within the control of

the business or can be altered by the business.o cost of goods, operating expenses, product mix

• External Factors: occur outside of the business operation and cannot be controlled by the business. o supply and demand, government regulations,

competition, natural and economic events

IMPLEMENTING AUTOMATED RETAIL: PRICE

PRICE TO MAKE A PROFIT• Retailers and School Based Enterprises need to

have a clear understanding of all of their costs involved. o The business must understand additional costs to

the retailer to sell the product through the automated retailing system.

• Automated retailing kiosks have additional costs of doing business.o leasing feeo credit card processing feeo specialized packaging and labels

IMPLEMENTING AUTOMATED RETAIL: PRICE

FEES AFFECT PRICING

• Leasing fees• Credit card processing fees• Specialized packaging and labels

IMPLEMENTING AUTOMATED RETAIL: PRICE

ACTIVITY

Pricing Products for the Automated Retailing Kiosk and SBE

IMPLEMENTING AUTOMATED RETAIL: PRICE

IMPLEMENTING AUTOMATED RETAIL: PRICE

PRODUCT Internal Factors External Factors Pricing Decision based on Internal and External Factors:

NIKE polo; custom embroidered with school mascot

Cost of item: $25 each

Packaging for Spirit Box: $.20

Credit card processing fee for Spirit Box: 2% of all credit card purchases

Company goals/profit objectives

Boosters online selling price for similar NIKE polo: $45

Price of other school stores in our district-:$40

Target market brand awareness

Total cost of goods- including packaging and credit card processing fee: $25.22

Company Objective: 50% markup on apparel

Retail price: $39

ACTIVITY

Pricing Spirit Factory Products for Automated Retailing

IMPLEMENTING AUTOMATED RETAIL: PRICE

QUIZ

Pricing Products and Considerations for Automated Retailing

IMPLEMENTING AUTOMATED RETAIL: PRICE