Intro to Marketing Mr. Bernstein Pricing Strategy, pp November 19-20, 2014

Factors Affecting Price (pp ) Costs – Fixed or Variable Supply and Demand Consumer Perceptions Competition What are your objectives? Return on Investment Gaining Market Share Cash Flow / Survival Legal / Ethical Issues 2 Intro to Marketing Mr. Bernstein

Pricing Strategy Approaches (pp ) Cost-Based Pricing Cost plus markup Demand-Based Pricing “What the market will bear” Competition-Based Pricing “Price Takers” Flexible or One-Price Policy What causes pricing strategy to change over time? 3 Intro to Marketing Mr. Bernstein

Pricing Techniques (pp ) Psychological pricing: Prestige pricing Odd/even pricing Price lining Promotional pricing Multiple Unit discounts Bundle pricing 4 Intro to Marketing Mr. Bernstein

How often should pricing be revised? Elastic demand – revise often Do you compete primarily on price, service or quality? 5 Intro to Marketing Mr. Bernstein

Analyzing Pricing (pp ) Break-even Analysis: Number of units that must be sold to cover fixed costs Fixed Costs / (Unit Selling Price – Variable Costs) = Break-Even Point 6 Intro to Marketing Mr. Bernstein

Analyzing Pricing Markup: Amount added to the cost of an item Cost + Markup = Price Markup / Cost = Percentage Markup AKA “Gross Margin”; doesn’t include overhead costs 7 Intro to Marketing Mr. Bernstein