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PRICE: Understanding and Capturing Customer value (Major Pricing…

- - - - Price of product
      - Time
      - Using cost
      - Warranty policy
      - Opportunity cos
- - - - The strategy of attaching value-added features and services to differentiate
        their offers and thus support higher prices.
    - - Assess customer needs and value perceptions
        
        Set target price to match customer-perceived value
        
        Determine costs that can be incurred
        
        Design product to deliver desired value at target price
    - - Everyday low pricing (EDLP)
      - High-low pricing involves
    - - Design a good product
        
        Determine product costs
        
        Set price based on cost
        
        Convince buyers of product's value
  - - - Variable costs
        
        vary directly with the level of production.
      - Total costs
        
        are the sum of the fixed and variable costs for any given level of production.
      - Fixed costs
        
        are costs that
        do not vary with production or sales level.
      - 1. Cost-plus pricing (Markup pricing)
        
        Unit cost = Variable +(Fixed cost)/(Unit sales )
        Markup price = (Unit cost)/( 1-Desired return on sales)
      - 2. Break-even pricing
        (target return pricing)
        
        Break-even volume=(fixed cost)/( price-variable cost)
  - - - is setting prices based on competitors’ strategies, costs, prices, and market offerings