How much will I charge for MILK? Pricing How much will I charge for MILK? Eagle Challenge Review of Pricing Weebly LT: Define the nature and scope of Pricing

Pricing Concepts Pricing Policies A basic pricing decision every business must make is to choose between a one-price policy and a flexible-price policy. A one-price policy is one in which all customers are charged the same price for the goods and services offered for sale. A flexible-price policy permits customers to bargain for merchandise.

Pricing Concepts New Product Introduction A business may elect to price a new product above, in-line, or below its competitors. When a going-rate strategy is not used, two polar methods may be used: skimming pricing is a pricing policy that sets a very high price for a new product to capitalize on the initial high demand for a new product penetration pricing sets the initial price for a product very low to encourage as many people as possible to buy the product.

Psychological Pricing Psychological pricing refers to techniques that create an illusion for customers or that make shopping easier for them. Common psychological pricing techniques are: odd-even pricing prestige pricing multiple-unit pricing bundle pricing promotional pricing everyday low prices (EDLP) price lining

Psychological Pricing Odd-even pricing involves setting prices that end in either odd or even numbers. Odd numbers convey a bargain image; even numbers convey quality. Prestige pricing involves setting higher-than-average prices to suggest status and prestige.

Psychological Pricing Multiple-unit pricing involves pricing items in multiples to suggest a bargain and increase sales volume. Bundle pricing involves including several complementary products in a package and pricing them lower as a group than if they were bought separately.

Psychological Pricing Promotional pricing is generally used in conjunction with sales promotions when prices are lower than average. Loss-leader pricing provides items at cost to attract customers. In special-event pricing, prices are reduced for a short period of time, such as a holiday sale.

Psychological Pricing Everyday low prices (EDLP) are low prices that are set on a consistent basis with no intention of raising them or offering discounts in the future. Price lining involves offering all merchandise in a given category at certain prices, such as $25, $35, and $50.

Setting Prices Discount Pricing Discount pricing involves the seller's offering reductions from the usual price. They include: cash quantity trade seasonal discounts promotional discounts and allowances

Discount Pricing Cash discounts are offered to buyers to encourage them to pay their bills quickly. Quantity discounts are offered to buyers for placing large orders. Noncumulative quantity discounts are offered on one order. Cumulative quantity discounts are offered on all orders over a specified period of time.

Discount Pricing Seasonal discounts are offered to buyers willing to buy at a time outside the customary buying season. Promotional discounts are offered to wholesalers and retailers willing to advertise or promote a manufacturer's products. Allowances are granted to customers for selling back an old model.

Steps in Setting Prices These are the six steps in determining a price for an item: 1. Determine pricing objectives. 2. Study costs. 3. Estimate demand. 4. Study competition. 5. Decide on a pricing strategy. 6. Set price.

Differentiated Pricing Customer-segment pricing Product-form pricing Image pricing Channel pricing Location pricing Time pricing Yield pricing

Predatory pricing: Selling below cost with the intention of punishing a competitor or gaining higher long-term profits by putting competitors out of business

11/1/15 Name the Pricing Strategy

Government Regulations Affecting Price Federal and state governments have enacted laws regarding: price fixing price discrimination resale price maintenance minimum pricing unit pricing price advertising

Government Regulations Affecting Price Price fixing occurs when competitors agree on certain price ranges within which they set their own prices. Price discrimination occurs when a firm charges different prices to similar customers in similar situations.

Government Regulations Affecting Price Resale price maintenance occurs when a manufacturer forces retailers to sell an item at a minimum price. Minimum price laws prevent retailers from selling goods below cost plus a percentage for expenses and profit. Some states do not have minimum price laws and allow loss leaders, items sold at cost to attract customers.

Government Regulations Affecting Price Unit pricing allows consumers to compare prices in relation to a standard unit or measure, such as an ounce or a pound. The Federal Trade Commission (FTC) price advertising guidelines forbid fraudulent and misleading pricing advertisements.

Pricing Strategies Pricing Strategies Captive product pricing involves products that must be used along with the main product Optional product pricing takes into account optional or accessory products along with the main product 11-8