Meaning Economists defines price as the exchange value of the product or service always

expressed value of the product or service always expressed in money. Price is the mechanism or device for translating into quantitative terms ( rupees & paisa) the perceived value of the product to the customer at the point of the time .

Importance of Pricing Price is a matter of vital importance to both the seller and the type buyer in the

market place .In money economy, without prices there cannot be marketing. In money economy, without prices there cannot be marketing.

Price regulates business profits, allocates the economic resources for optimum production and distribution.

Thus price is the prime regulator of production, distribution and compositions of goods.

Price influences consumer purchases decision. It can determine the general living standards. The most important marketing variables influenced by pricing decisions

are1. Sales volume 2. Profit margins3. Rate of return on investment 4. Trade margins 5. Advertising and sales promotion 6. Product Image 7. New product development.

Therefore, pricing decisions play a very important role in the design of the marketing mix.

Significance of the price factor:-The selling price plays a unique role in because of the price level :-

Controls the sales volume and the firm’s market share. Determines the total sales revenue ( Sales revenue = Sales Volume unit price ) Regulates the rate of return on investment (ROI) and through ROI price in

influences sales profitability. Creates an impact on unit cost in mass production.

Henry Ford “Our policy is to reduce the price extend operations and improve the product “

These are the significance or important of ‘Pricing ‘.

Objectives of Pricing Probable pricing Objectives

Pricing

Profit Centered Sales Oriented Status Quotas

Growth Growth in Maintaining

In Sales Market Share Market Share

Maximization of Target Avoiding or Meeting Non - Price Profits ROI Competition Competition

A variety of objectives may guide pricing Decisions

1. Growth in sales 2. Market Share 3. Return on Investment or Pricing for Target Return ( ROI) 4. Meeting Competition or Preventing Competition 5. Profit maximization 6. Stabilized Price 7. Customer’s ability to pay 8. Resource Mobilization 9. Control Cash flow.

1. Growth in sales A low price can achieve the objective of increase in sales volume. A Low Price is

Not always necessary. A right price can stimulate the desired sales increase.

2. Market Share Price is typically one of those factors that carry the heaviest responsibility for improving or maintaining market share a sensitive indicator of customer & trade acceptance.

3. Return on Investment or Pricing for Target Return (ROI) From the point of view of investors, principle pricing goals is to achieve the

expected profits the profit must compensate the investment made.

4. Meeting Competition or Preventing Competition The pricing objective may be to meet or prevent competition. While fixing

the price of similar products produced by other firms will have to considered

5. Profit Maximization Business of all kinds is run with an idea of earning profit at the maximum. Profits maximization can be enjoyed where the monopolistic situation exists .The goal should be to maximize profits on total output, rather than on every item

6. Stabilized price It is a long term objective and aims at preventing frequent and violet fluctuations in price. It also prevents price wave amongst the competitors. When the price often changes these arises no confidence in the product.

7. Customer’s Ability to pay :-The price that charged differs from person to person, According to his ability to pay. For instance, railways charge fare according to the capacity of the passengers, The policy is otherwise known as “ what the traffic will bear”.

8. Resource Mobilization:-Under this objective, the products are priced in such a way that sufficient resources are made available for the firms expansion.

9. Control Cash flow :-A principal pricing objective is to return cash as much as possible ( the fund invested ) within a given period .

Pricing Strategies & Stations:-A firm may choose varies kinds of pricing polices for their products. A few

important one are explained below:-1. Odd pricing 2. Psychological Pricing 3. Prestige pricing 4. Customer Pricing 5. Geographic Pricing 6. Price lining 7. Dual Pricing 8. Administered pricing 9. Monopoly Pricing 10. Penetration Pricing 11. Negotiated Pricing 12. Mark up Pricing 13. Shield Bid Pricing / Competitive Bidding 14. Skimming Pricing / Skim the Cream pricing