Pricing Techniques by srinivasareddy944


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									What are pricing techniques

The pricing method you select provides direction on
how to set your product price.
Pricing techniques
             Cost-based pricing
   Cost-based pricing is where the price includes the
   cost of ingredients and cost of operating the
   This method can be sub-classified as :
i. Cost plus pricing
ii. Full cost pricing
iii. Target profit pricing
iv. Marginal cost pricing
Cost-based pricing
Cost-based pricing
Cost-based pricing
Cost-based pricing
        Demand based pricing
Demand based pricing is a system where the price
is based on the customer ‘demand’ or need for the
product. If the product is unique or innovative, a
value-based price may help create a demand for
the product or service.
The following method belong to the category of
demand based pricing:
i. Skimming pricing
ii. Penetration pricing
Demand based pricing
Demand based pricing
This method of pricing is desirable under the following
conditions :
1. When sales volume of the product is very sensitive
    to price.
2. When a large volume of sales is to be effected.
3. When stability of price is required.
      Competition based pricing

This pricing method is useful when the product is
homogeneous and market is highly competitive.
Under this method, the company tries to maintain
the price of its products more or less at par with its
competitors price. This pricing method includes :
i. Premium pricing
ii. Discount pricing
iii. Going rate pricing
iv. Tender pricing
Competition based pricing
Competition based pricing
     Affordability based pricing

The affordability based pricing method is relevant
in respect of essentials commodities which meet the
basic needs of all sections of people. The idea here
is to set prices in such a way that all sections of the
population are in a position to buy and consume
the products to the requires extent.
Key Factors Affecting the Pricing
Factors which can be categorized into two main

Internal Factors

External Factors
             Internal Factors

1. Marketing Objectives
2. Costs
             Internal Factors
Marketing Objectives
 Return on Investment (ROI)

 Cash Flow

 Maximize Profits

 Market Share
             Internal Factors
 Fixed Costs

 Variable Costs
            External Factors

1. Elasticity of Demand
2. Government Regulation
3. Customer Expectations
             External Factors
Elasticity of Demand
 Elastic Demand

 Unitary Demand

 Inelastic Demand
            External Factors
Government Regulation
Customer Expectations
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