1. Pricing Chapter 19

2. Pricing Price Price Barter Barter Price equation Price equation

3. What is Value? Value= Perceived benefits/price Value= Perceived benefits/price Value-pricing Value-pricing Do higher prices= Better products? Do higher prices= Better products? Profit= Total Revenue- Total Cost Profit= Total Revenue- Total Cost

4. Pricing Process Identify Pricing Constraints Estimate Remand and Revenue Determine Cost, Volume, & Profit Relationships Select an Approximate Price Level Set List/Quote Price Make Special Adjustments to List/Quoted Price

5. Step 1: Identify Pricing Constraints Pricing Constraints Pricing Constraints Demand Demand Newness Newness Single product v. Product Line Single product v. Product Line Production and Promotion Costs Production and Promotion Costs Costs of Changing Prices Costs of Changing Prices Type of Competitive Markets Type of Competitive Markets Competitors’ Prices Competitors’ Prices

6. Step 1: Pricing Objectives Profit Profit Sales Sales Market Share Market Share Unit Volume Unit Volume Survival Survival Social Responsibility Social Responsibility

7. Step 2: Estimate Demand and Revenue Demand Demand Demand factors Demand factors Estimating Revenue Estimating Revenue Total Revenue Total Revenue Average Revenue Average Revenue Marginal Revenue Marginal Revenue Price Elasticity Price Elasticity

8. Step 3: Determine Cost, Value, and Profit Relations Costs Costs Total cost Total cost Fixed cost Fixed cost Variable Cost Variable Cost Marginal Cost Marginal Cost Break-even Analysis Break-even Analysis