Professional Documents
Culture Documents
By Karan Shah (140) Shweta Shinde (152) Sanmeet Surve (160) Kiran Uikey (171) Akanksha Wattal (176)
Pricing methods
Markup Pricing Going-rate Pricing Target-Return Pricing Perceived Value Pricing Value Pricing Auction-Type Pricing Psychological Pricing Group Pricing
Markup Pricing
Most elementary method of pricing Standard markup added to the products cost Calculation : For 30% markup price Markup price = Unit cost 1 desired return on sales Where, Unit Cost = Variable cost + fixed cost Unit sales
Markup Price
Products with the biggest markup pricing: Prescription medicine have the highest markups. Movie theater popcorn/candy. Branded clothing Restaurant drinks (hard drinks and soda) Packaged drinking water
Value pricing
To win loyal customers by charging low price for a high quality offering Reengineering companys operations To attract large number of value-conscious customers Major trend in the computer industry Example- McDonalds
Auction Pricing
English auctions Ascending bids eg. IPL , Ebay Dutch auctions Descending bids eg. IPO shares , Passing a tender
Psychological Pricing
Price based on human Psychology Prefers 2 digit number over 3 digit and so on Price ending with an odd digit Use words like special , sale Packaging style
Group Pricing
Consumers and or business buyers join groups to avail off volume discounts Groceries for purchases like poultry, frozen meat, dairy and bakery etc. Construction companies