Suppose, 'ABC Company' introduced some products in the markets. For the time being let us call it as P1, P2, P3, P4, P5. Consumers availed these products and kept using it. After a particular period of time, the company analyzed the performance of their products in the market. (The well performing products brings in more revenue to the company, the down performing products brings less revenue/profit to the company).
Let us say, P3 & P4 are contributing much lesser revenue compared to the overall revenue contributed by P1, P2 & P5. Maintaining P3 and P4 becomes thus an overhead for ABC Company. One solution is to completely eliminate P3 & P4 from their products list. But this solution is not a feasible one, because there may be customers who are still using the service. If they eliminate the products, at the same time the company is loosing the customer base also.
Second option is to reduce the price of P3 & P4. It will work sometimes, but at the same time it is another less feasible solution and unattractive.
Another option left with the company is to bundle P3 & P4 and sell it to customers. Or they can bundle P3 & P2, P4 & P4 etc etc. It depends on the type of product, type of the company on how to bundle their products. Additionally new and new customers will become happy that they are getting new products along with their actual subscription in lesser price. Also the prevailing customers will be retained for a longer time as well.
Single product pricing refers to a single purchase, such as one bottle of Pepsi. Multiple product pricing refers to purchasing more than one product at a time, such as a pallet of Pepsi.
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.
Pricing methods are a way to determine how a product will be priced. It basically is a planning process.
Pricing products that must be used with the main product. Like ink cartridges for the printer.
Almost all the firms have more than one product in their line of production. Even the most specialized firms produce a commodity in multiple models, styles and size, each so much differentiated from the other that each model or size of the product may be considered a different products e.g. the various models of television, refrigerators etc produced by the same company may be treated as different product for at least pricing purpose. The various models are so differentiated that consumers view them as different products. Hence each model or product has different average revenue (AR) and Marginal Revenue curves and that one product of the firm concepts against the other product. The pricing under this condition is known as multi-product pricing or product line pricing . In multi-product pricing , each product has a separate demand curve . But, since all of them are produced under one organization by interchangeable production facilities, they have only one inseparable marginal cost curve. That is, while revenue curves, AR and MR, are separate for each product, cost curves AC and MC are inseparable.
A product bundle pricing example is when a grocery store has a sale that includes a discount if the customer buys all of a list of selected items selected by the store.
Product bundle pricing is sellers combine several products at the same price. E.g software, books, CDs.
It's the pricing of the product
Single product pricing refers to a single purchase, such as one bottle of Pepsi. Multiple product pricing refers to purchasing more than one product at a time, such as a pallet of Pepsi.
Explain how product form pricing may be pricing option at Quills?
pricing a product depends upon the following factors which are1-product quality2-product features3-Product performance4-cost of production5-customer based pricing
Product Mix Pricing StrategiesA lot of companies have products with variants rather than than offering just a single version of the product. This is done to target different groups of consumers so that the company can get something out of every segment. For this Product Line Pricing is used in which their are different price marks which then vary on quality, features, and requirements. For examaple Dell the PC manufacturer makes a lot of different versions of its Pcs which then range from $269 to $25000.Optional-Product pricing is often used with Product-line Pricing in order to sell more to the customers, this is mostly done by electronic companies who prompt you to buy accessories as well with your original product for a better experience. Dell again is another good example of this as when ever you buy a Dell you get options to buy other accessories such as mice, speakers, keyboards, storage devices, flash drives, printers, etc. Car manufacturers are practice this to increase revenues as they offer add-ons such as alloy wheels, cd changers, leather interior, spoilers, and other trim options.Then there is Captive Product Pricing, which involves selling and making products that must be used along with the main product. Examples being; printer cartridges, video game cartridges, Razor blades, staples, computer software, or camera film(or memory cards these days).Another clever strategy is By-Product Pricing in which the company sells its By-products at a very cheap rate in order to attract customers to buy the firms main products.Most Customers are very much attracted when they see Bundle offers, a company may earn more revenue by selling different products in a bundle and giving discount on it, this way they will be able to sell more and give the customers more value. A very common examples is of restaurants which make food deals like Mc Donlads, KFC, Pizza Hut, all they do is bundle in a couple of their products discount them a little and that's its. The customer would be more willing to buy a set bundle rather than buying the same things separately. This is called Product Bundle Pricing.
philip lotler
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.
Pioneer pricing is setting an initial price for a new product. This is quite essential as it will be the basis of judging how the product does in the market.
a pricing method used in situations where a saleable by-product results in the manufacturing process. If the by-product has little value, and is costly to dispose of, it will probably not affect the pricing of the main product; if, on the other hand, the by-product has significant value, the manufacturer may derive a competitive advantage by charging a lower price for its main product.
Optional-product pricing is when after the initial pricing of a product is offered additional accessories are offered for that product at a price. This is a pricing option that has gained popularity over the years. Many companies offer a savings on bundled accessories with the purchase of product. Some companies may include cable companies, car companies, cell phone companies, banks, etc.