Costs & Expenses Supply and Demand Consumer Perceptions Competition Technological Trends Government Regulations Price gouging: price above mkt. when there is no alternative Price fixing: illegal; competing companies agree to restrict prices in a specified range Resale Price Maintenance: price fixing imposed by manufacturer
Cost-based pricing: consider you business cost and profit objectives Demand-based pricing: find out what customers are willing to pay Competition-based pricing: find out what competitors charge
Flexible-price policy: allow customers to bargain One-price policy: all customers are charged same price
Intro.sales are low, marketing costs are high, profits are low Price skimmingcharge high price to recover costs Penetration pricing-build sales by charging low initial price to keep cost low for customer Growthsales climb rapidly, unit costs decrease, profits begin, competitors enter the market Maturitysales slow and profits peak; profits fall off as competition increases. Declinesales and profits fall; business cut prices to generate sales or clear inventory
Trade and Promotional Discounts Seasonal Discounts
Break-even point: point at which the product price covers costs; gives you an idea on the number of units you must sell to make a profit Formula: (fixed cost divided by unit selling price)- variable costs=break even point in units Markup: amount added to cost of product to cover expenses and ensure a profit Cost+Price=Markup Markup / Cost=percentage markup on cost
Standard Markup: use a standard markup percentage Markdown: lowering price a certain percentage Discounts
Your consent to our cookies if you continue to use this website.