Recommended Retail Price
Methods of Pricing Products
Value-based pricing-Prices are based on the buyers perception of value rather than on the sellers cost
Market Skimming-Occurs when prices of a new product are set high and are gradually lowered as it moves through the PLC
Competition Based Approach-Company sets a price based on the pricecs competitors charge
Market Penetration-Occurs when prices are initially set low to attract a large volume of customers quickly
Cost-based approach-The company adds a standard mark-up to the cost of a product
Factors Affecting Pricing Decisions
Marketing Objectives-Objectives in this instance can differ
Target Market- Price can depend on who the firm is targeting
Positioning-Firms will price according to the perceived postion in the marketplace
Costs-Both Fixed and variable costs will have to be considered before prices are set
Economic Conditions-Levels of disposable income, employment employment rates and the general economic health of the marketplace will determin the prices acceptable to consumers
Definition: The amount of money charged for a product or service.
It is estimating the cost of the products. Organisations need to consider both variable and fixed costs. Pricing can be variable and can be adapted to suit markets
An organisation can reduce costs through improving effciency. They can also increase the percieved value of the product or service.