Pricing Techniques

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Pricing Techniques ????

What it means ??????

how it can be used?????

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Objectives

Pricing Techniques

Price Anchoring

Means placing premium price

items/services near standard

items/services.

Consumers mostly relies on the

first piece of information for

decision making purpose.

It will influence the decision

making process of the

consumers.

The premium priced items

information created a basis for

the decision making of the

consumer.

Example of Price Anchoring

Placing a premium watch of Rs 10,000 on

beside of the standard watch of Rs 2,000 in a

watch showroom.

Price Hiking

Means increasing the prices of the products/services without any negative impact on the sales performance.

It will increase the revenue of the organization even with the same sales performance.

To reduce the pain of the consumer due to the price hiking, the increase in price should not be more approx. 10 %(consider standard as per Weber’s Law) of the old price.

Example of Price Hiking

Before

Product X – Rs 100 increased to Rs 120.

Product Y – Rs 200 same as Rs 200.

After

Product X – Rs 100 increased to Rs 105.

Product Y – Rs 200 increased to Rs 215.

Remodel Pricing

Means remodel the prices in different ways without any

impact on the original prices.

It makes the buying options more flexible to the

consumers.

Various options will be available to the consumers and it

will improve the revenue of the organization.

It will create infusion that some benefit provided to the

consumer for loyalty which will be projected in the pricing

methodology.

Example of Remodel Pricing

Before Remodel Pricing

Annual Subscription : Rs 5000

After Remodel Pricing

Annual Subscription : Rs 5000

Half yearly Subscription : Rs 2750

Quarterly subscription : Rs 1500

Complementary Pricing

Means charging price to the customer as a single product for

a bundle of products.

Helps organizations to make outbound sales of multiple

products without appealing justification to each customers

in a customer group.

Acts as a effective marketing tool and creates positive sign

on the organization from the customer point of view.

Example of Complementary Pricing

Before -

An insurance offering individual health insurance policy for

premium of Rs 1000 p.a.

After –

Individual health insurance policy – Rs 1000 p.a.

Family health insurance policy – Rs 2500 p.a.

Pleasure Pricing

Means price will be charged to the customer for the

utility/pleasure enjoyed by the customer with the product.

Focused on the conservative spenders.

Promotional activities needs to make presentations on the

value addition of the products to the customers.

Needs to identify the conservative spenders and appropriate

sales messages to be made through social media.

Example of Pleasure Pricing

Making of Sales message or promotion activities

Spend Rs , for a payroll software and save your valuable time of business . Spend Rs 8 per month and make all local or STD calls without any charges .

Offer Supportive Pricing

Means every offer provided to the customers needs to be

supported by a reason which will be projected as benefit to

the customer.

Normal prices should not be reduced without any reason as

it will effect the loyalty and trust of the customers on the

pricing strategy.

No offers should prevail through the financial year, it should

have planned time period.

As the word Free will have tremendous impact on customers, hence needs to be properly handled.

Example of Offer Supportive Pricing

Before -

30% Off on Parker Jeans.

Every purchase of 2 peter England shirts – 1 shirt FREE.

After -

30% off on parker jeans as company loyalty discount.

Every purchase of 2 peter England shirts – 1 shirt FREE –

Christmas Limited offer.

Sweet Pricing

Means providing a good and sensitive words or sentences

along with the price tags/catalogs.

Customers will be influenced with the sentences made in the

promotional activities regarding the prices.

Project the same product as different products,

Offering the same product in different ways to multiple

customer bases will be turned out as sales even though the

content of the product does not differ.

Example of Sweet Pricing

Promotional Price tag line Bring Happiness to your Home for this Christmas with Domino’s Pizza - Rs 5 . Only . Add only at the end of the price Samsung J Series for Rs , only Add small at the starting of the price Annual membership at a small of Rs 50 contribution"

Level Pricing

Means providing different levels of pricing options to the

customers.

Usually options will be Cheaper, Regular & Premium

Options.

Different customers will have preferences for different

options for the same products.

Most of the customers will prefer for Regular price if there

are three options available for the same product.

Example of Level Pricing

Cost of the Wine

Cheaper option – Rs. 90

Regular Option – Rs. 120

Luxury Option – Rs. 150

Traditional Pricing

Means pricing the products ending with the odd numbers

especially number Nine.

As a tradition, Most of the business persons will have

conventional belief that products having prices which are

ending with number nine will be more attracted by the

customers.

In some cases, it increases the sales of the concerned

product even if the prices are increased (Price increased

from Rs 45 to Rs 49 only)

Example of Traditional Pricing

In India, Bata will follow the traditional pricing for its

products (Shoes) to attract its customers and it helps Bata to

differ its products from competitor products.

Shoes – Rs 1399 only.

Simple Pricing

Means projecting the product prices as simple as possible

without any syllables.

It helps to satisfy the customer that the product value was

justified for the product benefit.

If the prices contains less syllables will be more

comfortable for the customer and it will attract the

customers to buy the product.

Example of Simple Pricing

A product of Rs 1,500.00 can be represented as Rs 1500

only in a simple way on the price tag of the product.

One thousand and five hundred rupees only can be simply

represented as fifteen hundred only.

Memory map

Price anchoring

(Placing a premium

watch of Rs 10,000

on beside of the standard

watch of Rs 2,000 in a

watch showroom.)

Price hiking

(Less than 10%)

(Product X – Rs 100

increased to Rs 105

Product Y – Rs 200

increased to Rs 215)

Remodel pricing

(Ann Subs – Rs 5000

Hlf year Subs - Rs 2750

Qurtrly subs - Rs 1500)

Bundle pricing

(Individual insurance

policy – Rs 1000 p.a.

Family health insurance

policy – Rs 2500 p.a.)

Pleasure pricing

(Spend Rs 10,000 for

a payroll software and

save your valuable

time of business)

Offer supportive

pricing

(30% off on parker jeans

as company

loyalty discount)

Sweet pricing

(Bring Happiness to

Your Home for this

Christmas with Domino’s

Pizza at Rs 50. Only)

Level pricing

(Cheaper option – Rs. 90

Regular Option – Rs. 120

Luxury Option – Rs. 150)

Traditional pricing

(In India, Bata will

Follow the traditional

pricing for its

products (Shoes)