The main purpose; in my opinion; is to have reasonable pricing for any good that is convenient to the customer and in the mean time assuring a reasonable net profit to the dealer.
I'm doing a school assignment so I have no clue! :)
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value-based pricing approach
Value based pricing is based on percieved value of goods and services in view of customer. A marketer look at the price being offered to customer that how a customer is percieving the value of goods or services. It is price where all cost of product has been accounted and a fair judgment about percieved value for customer in market.
There are two basic methods of pricing of any products and services: cost-based and value-based pricing. The best choice depends on your type of business, what influences on customers to buy and the nature of the competition. This takes the cost of producing any product or service and adds an amount that we need to make a profit. This is usually expressed as a percentage of the cost. It is generally more suited to businesses that deal with large volumes or which operate in markets dominated by competition on price. But cost-based pricing ignores our image and market positioning. And hidden costs are easily forgotten, so our true profit per sale is often lower than we realise. This focuses on the price we believe customers are willing to pay, based on the benefits our business offers us. Value-based pricing depends on the strength of the benefits we can prove our offer to customers. If we have clearly-defined benefits that give us an advantage over our competitors, we can charge according to the value of our offer customers. While this approach can prove very profitable, it can alienate potential customers who are driven only by price and can also draw in new competitors.
The cost based pricing may overlook costs that are not monetary. Cost based pricing may overlook inefficiency Cost based pricing may not take advantage of consumer surplus.
Cost based pricing uses the costs that were invested in producing the goods. In market based pricing, supply and demand are the key factors that determine price.
I'm doing a school assignment so I have no clue! :)
cvbvb
value-based pricing approach
Cost plus pricing is based on full product cost plus desired profit margin to arrive at the product price, while marginal cost plus pricing makes use of the product's total variable cost plus desired profit margin to arrive at the product's price. Marginal cost plus pricing (or "mark-up pricing) is based on demand, and completely ignores fixed costs in arriving at the product's price.
Value based pricing is based on percieved value of goods and services in view of customer. A marketer look at the price being offered to customer that how a customer is percieving the value of goods or services. It is price where all cost of product has been accounted and a fair judgment about percieved value for customer in market.
Pricing is based on direct labor and overhead. Materials does not affect pricing. Example: Your customer provides materials used in production.
The price for a product can also be adjusted based on seasonal demands. Seasonal pricing will help move products when they are least salable.
Value based pricing is a method of pricing a product based on perceived value. This method sets aside the issue of production and distribution costs and focuses more on what the buyer is willing to pay. This method of pricing is the most popular way to bring more profits to a company's table.
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)
The advantage of value based pricing is increased profits and customer loyalty. The disadvantages are labor cost, competition, and the niche market.