1. PRICE

2. Factors Affecting Price
Costs & Expenses
Supply and Demand
Consumer Perceptions
Competition
Technological Trends
Government Regulations
Price gouging: price above mkt. when there is no alternative
Price fixing: illegal; competing companies agree to restrict prices in a specified range
Resale Price Maintenance: price fixing imposed by manufacturer

3. Pricing Strategies
Cost-based pricing: consider you business cost and profit objectives
Demand-based pricing: find out what customers are willing to pay
Competition-based pricing: find out what competitors charge

4. Pricing Policies Flexible-price policy: allow customers to bargain
One-price policy: all customers are charged same price

5. Product Life Cycle
Intro.—sales are low, marketing costs are high, profits are low
Price skimming—charge high price to recover costs
Penetration pricing-build sales by charging low initial price to keep cost low for customer
Growth—sales climb rapidly, unit costs decrease, profits begin, competitors enter the market
Maturity—sales slow and profits peak; profits fall off as competition increases.
Decline—sales and profits fall; business cut prices to generate sales or clear inventory

6. Pricing Techniques Psychological Pricing Discount Pricing
Prestige pricing
Odd/even pricing
Price lining
Promotional pricing
Multiple-unit pricing
Bundle pricing
Cash discounts
Quantity discounts

7. Pricing Techniques continued
Trade and Promotional Discounts
Seasonal Discounts

8. Calculating and Changing Prices
Break-even point: point at which the product price covers costs; gives you an idea on the number of units you must sell to make a profit
Formula: (fixed cost divided by unit selling price)- variable costs=break even point in units
Markup: amount added to cost of product to cover expenses and ensure a profit Cost+Price=Markup
Markup / Cost=percentage markup on cost

9. Standard Markup: use a standard markup percentage
Markdown: lowering price a certain percentage
Discounts