صفحه 1:
MARKET PRICING
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صفحه 2:
Learning Objectives
> Identifies the different factors
influencing pricing.
< Comprehends the considerations in
pricing analysis.
> Differentiates the pricing models base
on their significance.
> Illustrate the supply chain in
discounted) pricing.
صفحه 3:
Several Factors Influence
Pricing
> Strategic goals
> Demand of the products
>» Competitor pricing
صفحه 4:
Considerations in Pricing
Analysis
PIs your business recouping your costs
(time, money, materials, etc.) to
provide it?
PIs it affordable to customers?
>What about volume or other forms of
discounts?
> What should be the new prices, if any?
<< How do you know?
صفحه 5:
Pricing Models
1. Cost Plus
» A predetermined margin (an amount beyond
the minimum necessary) was added to
product cost to form the price.
صفحه 6:
» Advantages
» Easy to calculate
» Minimal information requirements,
» Easy to administer
» Tends to stabilize markets - insulated from demand variations
and competitive factors
» Insures seller against unpredictable, or unexpected later costs
» Ethical advantages (just price)
» Disadvantages
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» Tends to ignore the role of consumers
» Tends to ignore the role of competitors
» Use of historical accounting costs rather than replacement
value
» Use of “normal” or “standard” output level to allocate fixed
costs
» Inclusion of sunk costs rather than just using incremental costs
» Ignores opportunity costs
» Contractors may not focus on performance because the cost is
always covered by the client
صفحه 7:
2. Market Pricing
> Involves establishing the value of the
market and its trends, the unit prices being
paid within the market, finding a credible
position within that range which is
consistent with your offering and your
strategy, and deducing the margins and
volumes which should be available from
different channels into the market.
صفحه 8:
Options of Market Pricing
>» Backward Pricing (Demand-Backward Pricing)
» Method in which costs are deducted from what
consumers are willing to pay, to see if an adequate profit
margin is possible.
» Psychological Pricing
» Setting prices according to the psychographics (analysis
of consumer lifestyles to create a detailed customer
profile) of the aimed-at market segment.
» Price Lining or Product Line Pricing
» Method that primarily uses price to create the separation
between the different models.
صفحه 9:
3. Discounted Pricing
» Where you start by looking at market pricing
to establish a recommended retail price
(RRP).
صفحه 10:
Fictional Example
Assume you are the manufacturer and you are going to want to
supply this globally via retail outlets and retailing catalogues,
duty iree outlets and Via distributors selling other items) Each
step the product makes must make a margin to cover that
steps distribution and logistics costs etc.
Example route to an overseas market into retail outlets.
Seu at the end customer who buys from retailer for the RRP
of $200, the retailer whose revenue is $200 per unit sold buys
from a wholesaler at a 50% discount off RRP or RRP$200 x 0.5
= $100 leaving the retailer a margin $100 per unit sold above
۳ cost to cover their costs of selling and logistics with
heir multiple local stores.
The wholesaler who gets $100 total revenue per unit sold to
retailers, buys from import/export sales agent expecting to
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لخن ریات دیهد دید دورو[ buys at $80) each from the
import/export sales agent making $20 each to cover their costs.
صفحه 11:
The import/export sales agent who makes 0
revenue each when selling to wholesalers, buys the unit
direct from the manufacturer expecting to make a 15%
margin because of their extensive links with wholesalers in
the target country but minimal logistics, they buy at $80 x
9 در < 0 lean
So having researched and established this route to
that market for this product the manufacturer can plan to
expect that “import/export Sales agents" be offered terms
equivalent to $68 of the RRP of $200 which could be
described as "0.34 of RRP” or a 66% discount off RRP.
Note: The Manufacturer will know that to sell through
that channel they can expect to get $68 each for these Mid
range Hi-fi system which end customers like you or | pay the
RRP of $200 each for in the shops. (fjese figiifes are trade
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صفحه 12:
If the direct costs associated with making this
product are parts $25, labour $10, plus direct tooling
and machinery eel writing down costs of $5 per
unit making a total product (production) specific unit
cost of $40, the manufacturer will make a gross
margin of $28 per unit or 28/68 = a 41% margin,
From this 41% margin, $28 per unit, the
manufacturer must be able fund all their fixed costs
including management and administration,
ی Management, development engineering,
heir own sales and marketing efforts, buildings, etc.
صفحه 13:
References
» http://managementhelp.org/mrktng/
pricing/pricing.htm
> http://en. wikipedia. org/wiki/Cost-
plus_pricing
» http://www.knowthis.com/tutorials/
principles-of-marketing/setting-price/
8.htm
> http://www.businessdictionary.com/
صفحه 14:
GOOD DAY!!! ©
