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The Price Strategy

This comprehensive guide explores key factors affecting pricing strategy, including costs, supply and demand, consumer perceptions, competition, and technological trends. It covers essential pricing objectives, such as achieving target returns, gaining market share, and upholding social and ethical standards. You will learn about basic pricing strategies, various pricing policies, and the product life cycle. Additionally, we discuss important pricing techniques and the significance of break-even analysis. Equip yourself with the knowledge to make informed pricing decisions in your business.

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The Price Strategy

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  1. The Price Strategy

  2. Factors Affecting Price • Costs and Expenses • Supply and Demand • Consumer Perceptions • Competition • Government Regulations • Technological Trends

  3. Pricing Objectives • Obtaining a Target Return-on-Investment • Obtaining Market Share • Other Objectives • Social and Ethical Considerations • Establishing an Image • Meeting the Competition’s Prices

  4. Adjusting Prices to Maximize Profit • Are your products elastic or inelastic? • Elastic = small change in price, great change in demand • Inelastic = change in price, no effect on demand • What are your competitors prices? • Relate to competitors price properly

  5. Basic Price Strategies • Cost-Based – Adding a mark-up to turn a profit • Demand-Based – Charge what customers are willing to pay. Inelastic demand is necessary. • Competition-Based – Price below, in-line, or above the competition.

  6. Pricing Policies • Flexible Price – Allow customers to haggle over price • One-Price – Customers are treated equally.

  7. The Product Life Cycle • Introduction • Growth • Maturity • Decline

  8. Pricing Techniques • Psychological • Prestige Pricing • Odd/Even Pricing • Price Lining • Promotional Pricing • Discount Pricing • Cash discounts • Quantity discounts • Trade discounts • Promotional discounts • Seasonal discounts

  9. Break-Even Analysis Fixed Expenses _________________ = Breakeven Point Unit Sales – Variable Expenses

  10. Revising Prices • MarkUp • Cost + Markup = Price • MarkDown • Price x Markdown % = Markdown

  11. Reacting to Market Prices • Prices fall = Lower your price • Prices rise = Raise your price • Special Market Circumstances • National convention • Emergencies/Natural Disasters • Require a balance between responsibility to your business and social responsibility

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