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TRANSACTION PRICING

TRANSACTION PRICING. December 11, 2002. Transaction Pricing Developing unit prices for individual products or services. Pricing Considerations. Define unit of service or product Understand the market Customers Competitors Product/Service Life Cycle Volume Potential Barriers to Entry.

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TRANSACTION PRICING

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  1. TRANSACTION PRICING December 11, 2002

  2. Transaction Pricing Developing unit prices for individual products or services

  3. Pricing Considerations • Define unit of service or product • Understand the market • Customers • Competitors • Product/Service Life Cycle • Volume Potential • Barriers to Entry

  4. Pricing Considerations

  5. Pricing Considerations - Cost Base • Fixed versus variable costs • How quickly fixed costs can be avoided • Individual product/service variable costs (if producing or rendering more than one) • Marginal and incremental costs • Target volumes and break-even points • Sensitivity analysis on volume levels (market share) • Capital investment • Working Capital requirements

  6. Pricing Considerations

  7. Investment Risk • Achieving target volumes • Competitor reactions • Risk mitigation strategies • Cost variability • Sharing risk and rewards with suppliers/partners

  8. Go Forward Strategy • Plan strategy before entry • Position product/service as evironment changes • Quickly adjust as competitiors’ react and customer values change

  9. Key Decision Drivers • Willingness to Pay • Our Advantage • Winning price • Break-even, Profit • Fixed,Variable • Return on Investment • Drive market share • Customers • Competition • Market Price • Volume • Costs • Investment • Strategy

  10. eds.com Mary Bundy 613-787-4630 mary.bundy@eds.com

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