1. Pricing
You don’t sell through price. You sell the price.

2. Synonyms for Price Rent Special assessment Tuition Bribe Fee Dues Fare
Rate
Toll
Premium
Honorarium
Special assessment
Bribe
Dues
Salary
Commission
Wage
Tax

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

4. Setting Pricing Policy
1. Selecting the pricing
objective
2. Determining demand
3. Estimating costs
4. Analyzing competitors’
costs, prices, and offers
5. Selecting a pricing
method
6. Selecting final price

5. Sum of the Fixed and Variable Costs for a Given
Types of Costs
Fixed Costs
(Overhead)
Costs that don’t
vary with sales or
production levels.
Executive Salaries
Rent
Variable Costs
Costs that do vary
directly with the
level of production.
Raw materials
Total Costs
Sum of the Fixed and Variable Costs for a Given
Level of Production

6. 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

7. 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.

8. 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.

9. 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.

10. 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. 11/1/15
Name the Pricing Strategy

12. 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

13. 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.

14. 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.

15. 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.

16. 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

17. Some important pricing definitions
Utility: The attribute that makes it capable of want satisfaction
Value: The worth in terms of other products
Price: The monetary medium of exchange.
Value Example: Caterpillar Tractor is $100,000 vs. Market $90,000 $90,000 if equal 7,000 extra durable 6,000 reliability 5,000 service 2,000 warranty $110,000 in benefits - $10,000 discount!