Presentation on theme: "Slide 1 Goals * Identify pricing objectives for a business. * Calculate the price for products using various methods. * Discuss factors to consider when."— Presentation transcript:
Slide 1 Goals * Identify pricing objectives for a business. * Calculate the price for products using various methods. * Discuss factors to consider when pricing services. * List and describe various pricing techniques.
Slide 3 * price * the amount a customer pays for a product or service * needs to be low enough that customers buy from you * needs to be high enough so revenues exceed expenses
Slide 4 * Objectives might include: * maximize sales * discourage competition * establish an image * increase profits * attract customers Objectives for a pricing program should be established prior to selecting a pricing strategy.
Slide 5 * investment * the costs of making and marketing a product * return on investment (ROI) * amount earned as a result of the investment ( usually expressed as a percentage)
Slide 6 * market share * a business’s percentage of the total sales generated by all companies in the same market * The total market for a product must be known in order for market share to be determined.
Slide 7 Amount of Sales ÷ Total Market Size Market Share =
Slide 8 * lowering prices * advertising and promotion * networking with potential customers There are multiple ways to increase market share including:
Slide 9 Why is it important to determine pricing objectives before pricing goods and services?
Slide 10 * There is usually more than one price that can be charged for a product.
Slide 11 * demand-based pricing * pricing that is determined by how much customers are willing to pay for a product or service * Survey customers to determine what they would be willing to pay for a product. * The highest price identified is the maximum price that can be charged.
Slide 12 * cost-based pricing * determined by using the wholesale cost of an item as the basis for the price charged * markup price * determined by adding a percentage amount to the wholesale cost of an item
Slide 14 * competition-based pricing * pricing that is determined by considering what competitors charge for the same good or service
Slide 15 * To set a price for a service, consider the following: * the cost of items used in providing the service * the amount of time required to produce the service
Slide 16 * The amount of time it takes to complete a service will be the basis for determining the price of the service. * Providers must decide whether the cost of materials will be: * included in the price * listed as a separate charge
Slide 17 * bundled pricing * when all services are combined under one charge
Chapter 5 Slide 18 Which method would be the best for a housepainter to use to price services? Why?
Slide 19 * Pricing can make or break a business. * Pricing techniques may change over time.
Slide 20 * price skimming * used for products that are new and unique * a high price is charged to cover product development costs * Price lowers over time * penetration pricing * a low introductory price is charged to build a strong customer base * discourages competition
Chapter 5 Slide 21 * psychological pricing * certain prices have an impact on how customers perceive a product * used most commonly in retail
Slide 22 * prestige pricing * a high price to create a feeling of superiority * odd/even pricing * prices ending in odd numbers are perceived to be bargains Techniques used in psychological pricing include the following:
Slide 23 * for a specific category of products * offering different prices * based on specific features and qualities * promotional pricing * temporarily offering lower prices to increase sales * multiple-unit pricing * pricing items in multiples * consumers buy more units if they perceive a bargain price lining