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Price - Coggle Diagram
Price
pricing objectives
cost-based pricing
-known as cost plus pricing or mark up pricing
-simplest way to establish pricing
(Once a company can establish its cost, it will then just mark up a certain amount to get the price)
break even & target profit pricing
-Target profit pricing requires the company to establish its
break even point first. This approach is still cost-oriented
but is more sophisticated than mark up pricing.
-At break even, there is no profit or loss being made approach is useful if the company has a clear Return on Investment (ROI) in mind and is able to manage its costs in order to lower its breakeven point.
value-based pricing
-more customer-oriented approach to pricing
-Instead of focusing on the (company) seller’s costs, it uses the buyer’s perception of value to establish price.
competition-based pricing
-known as going rate pricing
-Companies which use this approach benchmark against key competitors and establish their pricing based on competitors’ pricing
key pricing methods
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At different stages of the PLC, different pricing strategies may need to be implemented to react to changes or to continue to reap maximum revenue from the product.
strategies are known as price adjustment strategies.
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importance of price in the marketing mix?
Marketing is usually regarded as a cost centre in a business- this means that it generates cost rather than revenue
Price is the only marketing mix element that produces revenue