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Traditional Pricing Strategies (Cost-Based Pricing (Hinges on the amount…
Traditional Pricing Strategies
Cost-Based Pricing
Hinges on the amount that it costs the firm to produce the good/service
Cost-Plus Pricing: Involves the addition of a fixed mark-up to the cost price
Target Profit Growth: Managers a re rewarded for meeting a target growth rate for the product
Target Return Pricing: Aims to maximize the returns for shareholders by ensuring that they receive a certain percentage return on their investment
Value-Based Pricing: Occurs when you price your product/service on something other than its cost
Price as a sign of quality
If priced high, must be of good quality
Value Pricing
Done by appealing to the consumers sense of value by offering a package that appears to be of higher value than the requested price
Prestige Pricing
Producers set a high price to signify that their product has a large amount of prestige attached to it
Versioning
Involves selling your product to different consumers depending on how much they are willing to pay
Fairness in Pricing
Consumers use past prices, prices for close substitutes & the context at which the item is purchased
Pay what you think is fair
Bundling
Where 2/more distinct products are sold together as a package for 1 price