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Cost - Based Pricing
• Price = Direct costs + Overhead costs + Profit margin.
• ( Direct costs involve materials and labour that are associated with delivering the service, overhead costs are a share of fixed costs, and the profit margin is a %age of full costs( direct + overhead)
Problems with cost - based pricing
• Costs are difficult to trace.
• Labour is more difficult to price than materials.
• Costs may not equal the value the customers perceive the services are worth
• Cost - based pricing is used in construction, engineering, advertising.
• Hourly fee usually charged for consultancy or by lawyers.
Competition- based pricing
Focuses on the prices charged by other firms in the same industry and market. This approach usually works where services are standard (eg dry- cleaning) or where there are oligopolies (a few large service providers, as in airlines)
Problems
• Small firms may charge too little and not make adequate margins. Many small establishments cannot deliver services charged by chain operators.
• Heterogeneity of services across and within providers also makes it difficult for a firm to follow this approach. (eg different banks have different charges for making D.D.s.
• Price signaling occurs in a market with a high concentration of sellers. Any price offered by one company will be matched by competitors to avoid giving a low- cost seller an advantage eg airlines.
• Going - rate pricing involves charging the most prevalent rate in the market. ( eg Taxi operators in NCR). For years the rates set by Hertz for car rentals were matched by all others.
Demand - based pricing
This involves setting prices in accordance with customer perceptions of value. Price is based on what the customer will pay for the services provided. In this approach non - monetary costs and benefits must be factored into the calculation of perceived value.
Problem
• When services require time, inconvenience, psychological and search costs, the monetary price must be adjusted to compensate.
• And when services save time, inconvenience psychological and search costs, the customer is willing to pay a higher monetary price.
• The challenge is to correctly assess the value to customers of each of the non- monetary aspects involved.
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What is a price what are the factors to be considered when setting a price what are general pricing approaches?
sir why are you not answering me?
What does predatory pricing mean?
The pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market
What are the advantages and disadvantages of Predatory Pricing?
The pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.
Contrast the three general approaches to setting prices?
There are four general pricing approaches:1) mark-up pricing - is to have a fixed mark-up on the cost of the product to set the price, ex: retail stores2) value-based pricing (demand-based pricing) is setting price based on buyers' perceptions of value independent of cost, ex: Louis vuitton and rolex (nobody ever questioned how much it costs to make a rolex cost, price is not in relation to cost. people base it on how many people have it, brand name)3) value pricing: is offering the right combination of quality and good service at a fair price, ex: value meal menu4) comepetition-based pricing: is to set price following that of the industry leader ex: breakfast cereal (ex: kellogs)
What is pricing power inflation?
Pricing Power InflationPricing power inflation is more often called administered price inflation. This type of inflation occurs when the business houses and industries decide to increase the prices of their respective goods and services to increase their profit margins. Pricing power inflation does not occur at the time of financial crises and economic depression or when there is a downturn in the economy. This type of inflation is also called oligopolistic inflation because oligopolies have the power of pricing their goods and services at whatever levels they want.
What is a price what are the factors to be considered when setting a price what are general pricing approaches?
sir why are you not answering me?
External and internal pricing?
External pricing is pricing of goods and or services that will be sold to out side company's. While internal pricing are prices set to sell goods to another department with in its own company.
What are pricing objectives of FMCGs Services industry and Nonprofit Organizations?
Pricing objective is the main component of pricing process. For FMCGs Services industry and Nonprofit Organizations you have to consider, financial, marketing and strategic objectives of the company, the objectives of your product, Price elasticity, available resources.
What does predatory pricing mean?
The pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market
Marketing audit services?
What are the major approaches to marketing audit services and obtaining new clients? What are the major approaches to marketing audit services and obtaining new clients? what are the major approaches to marketing audit
What are the advantages and disadvantages of Predatory Pricing?
The pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.
What is deceptive pricing?
The pricing of goods and services in such a way as to cause a customer to be misled is referred to as Deceptive Pricing. Examples of deceptive pricing are Savings claims, price comparisons, "special" sales, "two-for-one" sales, "factory" prices, or "wholesale" prices.
What is above-market pricing?
Above-market pricing is pricing a good higher than the current market comparable and what a buyer paid for like products or services. It is inflating the price over what the market dictates.
Which term is used to describe the offering of equal or better quality products or services at a lesser price than your competitors?
Predatory pricing is what you call a pricing strategy where you offer the same products and services for a lesser price than your competitors.
What kinds of services are offered by the Fitch Ratings company?
There are many kinds of services offered by The Fitch Ratings. For example include "Research Services", "Structured Finance Solutions" and "Pricing Services".
Which is the best cab services in Bangalore?
There are a vast array of good services - Its always advisable to seek out local companies and discuss pricing.
What are the advantages of client-server approaches particularly against centralized services?
A client-server approach is a type of centralized service. You probably mean "What are the advantages of peer-to-peer approaches particularly against centralized services?". Ask your question again.
