Pricing is a method of determining the value, a producer will get in the exchange of good and services. Many roles and responsibilities of pricing. 6 Steps to follow in pricing Different types of pricing methods

1. Presentation by Simhadri Bhavana
Centurion University
Guided by Dr. Sisir Ranjan Dash
Pricing

2. What is Price?
Amount of money for
which someting is
bought or sold.
What is Pricing?
Method of determining the
value, a producer will get in the
exchange off goods & services.

3. In combination with promotion becomes a strong
tool for influencing buyers to buy.
It determines the standard of living.
It is a strong weapon against competitors.
It determines profit on sales.
It influences two types of management decisions:
1. Setting price of new products.
2. Adjusting price of existing products.
Role of Pricing:

4. It communicates the quality of the
product.
It depends on marketing program and
organizational use in different ways.
It should be set in coordination with the
distributors.
For the survival in market.
For the expansion of profits.
To rule the market.
To create a market with
innovative ideas.
The main objectives of
setting pricing:

5. Steps in setting
price

7. 01.Mark up
Pricing
Method
Method
a standard markup
is added to the
product cost.
They are generally
higher on seasonal
items.
Merits
recovers cost as early
as possible.
simple method to
practice.
price competition can
be minimized.
fair for both buyers &
sellers.
Demerits
ignores current
demand &
customer
perception of price.
doesn't consider
competition.
difficult to estimate
exact sales.

8. Perceived-value
pricing method
Method
The valuation of good
or service according
to how much
consumers are
willing to pay for it,
rather than upon its
production and
delivery costs.
Merits
Matches with
consumer
orientation.
Considers
indirectly
competitors
offers.
Most suitable
price can be set.
It is practically
difficult to
measure
perception of
the market.
Based on trust.
Difficult &
complex to
understand &
apply
Demerits

9. Going-rate
pricing
method
Method
Here the firms set
the price of the
product or service
based on the
market price.
It is based upon
the competitors
Merits
It is the only way to set
the price when costs
are difficult to
measure.
Brings uniform pricing
in the industry.
Protect consumer from
cheating &misguiding.
Demerits
Not an ideal
method as it
considers
competition only.
Senseless to
blindly follow
competitors only.

10. Pricing method
Prices are selected on the basis
of sealed bids for job.
Companies must submit their
bids by a certain time.
The bids are later reviewed all
at once, and the most
desirable one is chosen.
Sealed bids can occur on
either the supplier or the buyer
side.
Merits
There's no further need for
negotiations and the best
and final offers format
means that potential buyers
always reveal their bottom
line.
Demerits
Suppliers are given less
preferences.
Less clarification about
suppliers to meet
specifications.
Lack of flexibility.
Sometimes the speed of the
process can prove costlier.
Method

11. Method
a pricing method in which a
formula is used to calculate the
price to be set for a product to
return a desired profit or rate of
return on investment assuming
that a particular quantity of the
product is sold.
method
Merits
High profits.
Optimal usage of resources.
Provides value added
products.
Cost reduction.
Responds to market changes.
Demerits
Miscalculations may lead to strategy
failure.
Sometimes the cost is unrealistic.
Technology usages according to price.
Lower prices may affect the company in
the long run.
Losses may occur, if business fails.

12. Break even
Pricing
method
Method
a financial calculation that
weighs the costs of a new
business,
service or product against the
unit sell price to determine the
point at which you will break
even.
1.
2.
Merits
It demonstrates how many things
they must sell in order to make a
profit. It determines if a product is
worth selling or is too dangerous to
sell.
It indicates how much money the
company will make at each level of
output.
Demerits
Businesses can be
unrealistic in their
calculations. variable costs
could change regularly,
meaning the analysis
could be inaccurate.

13. Thank
You!
Presentation by Simhadri Bhavana
Centurion University