Price

 Price is what is charged by the supplier to the consumer  Can be a deciding factor in a consumer choosing your product over you consumers  There are many different methods you can use to price your product Price

 Looks at the costs of a product and adds either a percentage or amount of profit that the business wants to make.  Eg. You have $10 fixed costs per item and $8 variable costs, so your total cost per item is $18, you want to make a profit of $2 per item, so your price would then be $20 Cost pricing

 Occurs when the business estimates how much consumer are willing to pay for the product  For example, if it is a new product with little or no competitors then the business may set a high price as that is what consumers will be prepared to pay for the item Market pricing

 This occurs when you look at the prices of your competitors and compare and price you product according  For example there may be a similar competitors product, however yours may be of a better quality so you may choose to price your product just above that of your competitor’s Competition-based pricing

 Where a product is just entering the market, the business charges a high price for the product, it usually occurs at the beginning of the products life cycle  The high price is needed to cover the initial setting up and production of the product, including research and development  Market skimming can be seen in the introduction of new technologies Market Skimming

 Setting a very low price – used to grow product sales rapidly and get a big share of the market  Used at the growth stage of the product life cycle – after the business has recovered it development costs and before copy cat products are made  The business is trying to establish itself as a brand leader – which when achieved can be difficult for competitors to then dislodge Market Penetration Pricing

 A pricing strategy used by retailers to attract customers to a shop  The retailer offers a product at such a low price that it will not make a profit but in the expectation that customers will be enticed to buy other products that they sell – and make up the loss through sales of other products Loss Leaders

 Discounts are reductions in the basic list price or recommended retail price of products. Prices can be discounted for a number of reasons, -Purchase of a large number of products -As a reward for customer loyalty -For immediate cash payment -For bulk buying -For clearing old or superseded stock -For closing down a business -With trade ins Many specials or price cuts are part of a promotional strategy aimed at attracting customers Price reductions

 Pricing is part of the overall marketing strategy  Pricing often goes hand-in-hand with sales promotions such as prizes, competitions and ‘free’ extras Pricing and Marketing