Pricing- Part DeuxPricing- Part Deux

Chapter 20Chapter 20

Pricing ProcessPricing Process

Identify Pricing Constraints

Estimate Remand and Revenue

Determine Cost, Volume, & Profit Relationships

Select an Approximate Price Level

Set List/Quote Price

Make Special Adjustments to List/Quoted Price

Step 4: Select an Appropriate Step 4: Select an Appropriate Price LevelPrice Level

Demand-Oriented Demand-Oriented Cost-OrientedCost-Oriented Profit-OrientedProfit-Oriented Competition-OrientedCompetition-Oriented

Demand-OrientedDemand-Oriented

Price SkimmingPrice Skimming Penetration PricingPenetration Pricing Prestige PricingPrestige Pricing Price LiningPrice Lining Odd-Even PricingOdd-Even Pricing Target PricingTarget Pricing Bundle PricingBundle Pricing Yield Management Yield Management

PricingPricingSource: http://www.clker.com/clipart-125655.html

Cost-OrientedCost-Oriented

Standard Mark-up Standard Mark-up PricingPricing

Cost-Plus PricingCost-Plus Pricing Experience Curve Experience Curve

PricingPricing

Profit-OrientedProfit-Oriented

Target Profit PricingTarget Profit Pricing Target Return on Sales PricingTarget Return on Sales Pricing Target Return-on-Investment PricingTarget Return-on-Investment Pricing

Competition-Oriented Competition-Oriented PricingPricing

Customary PricingCustomary Pricing Above-, At-, or Below-market PricingAbove-, At-, or Below-market Pricing Loss-LeaderLoss-Leader

Step 5: Set the List or Quoted Step 5: Set the List or Quoted PricePrice

One-Price v. One-Price v. Flexible-Price PolicyFlexible-Price Policy

EffectsEffects CompanyCompany

Product-line pricingProduct-line pricing Customer effectsCustomer effects

PerceptionsPerceptions CompetitiveCompetitive

Price warPrice warSource: http://www.clker.com/clipart-price-tag.html

Step 6: Make Special Step 6: Make Special Adjustments to the List or Adjustments to the List or

Quoted PriceQuoted Price DiscountsDiscounts

Quantity DiscountsQuantity Discounts Seasonal DiscountsSeasonal Discounts Trade (Functional) DiscountsTrade (Functional) Discounts

$100 less 25/20/10$100 less 25/20/10 Cash Discounts Cash Discounts

$1,000 2/10 net 30$1,000 2/10 net 30

Step 6: Make Special Step 6: Make Special Adjustments to the List or Adjustments to the List or

Quoted PriceQuoted Price AllowancesAllowances

Trade-in AllowancesTrade-in Allowances Promotion AllowancesPromotion Allowances

EDLPEDLP

Step 6: Make Special Step 6: Make Special Adjustments to the List or Adjustments to the List or

Quoted PriceQuoted Price Geographical AdjustmentsGeographical Adjustments

FOB Origin PricingFOB Origin Pricing Uniform Delivered PricingUniform Delivered Pricing

Single-Zone PricingSingle-Zone Pricing Multiple-Zone PricingMultiple-Zone Pricing Freight Absorbed PricingFreight Absorbed Pricing Basing-Point PricingBasing-Point Pricing

Legal IssuesLegal Issues

Price fixingPrice fixing Price discriminationPrice discrimination Deceptive pricingDeceptive pricing Geographical pricingGeographical pricing Predatory pricingPredatory pricing