1. Pricing
Price is all around us.

2. Pricing
You pay rent for your apartment, tuition for your education, and a fee to your dentist or physician.
The airline, railways, taxi and bus companies charge you a fare; the local utilities call their price a rate; and the local bank charges you interest for the money you borrow.
The guest lecturer is paid an honorarium and the government official takes a bribe to pass a file which was his job anyway.

3. Price brings in the revenues
This is the only element in the marketing mix that brings in the revenues. All the rest are costs
Price communicates the value positioning of the product.

4. Pricing A firm must set a price for the first time when
It develops a new product
It introduces its regular product into a new distribution channel or geographical area
It enters bids on new contract work ( as in Industrial Sale )

5. Pricing
A company must set its price in relation to the value delivered and perceived by the customer

6. Company misses potential profits
Pricing
Higher price
Lower perceived value
Company misses potential profits

7. Company fails to harvest potential profits
Pricing
Lower price
Lower perceived value
Company fails to harvest potential profits

8. Price = Cost + Profit

9. Pricing policy (Factors )
Selecting the pricing objective
Determining demand
Estimating costs
Analyzing competitors – costs, prices, offers
Selecting a pricing method
Selecting the final price

10. The pricing objective
The company first decides where it wants to position its market offering. The objective could be :-
Survival
Maximize current profit
Maximize market share
Maximize market skimming
Product - quality leadership

11. Determining Demand
Each price will lead to a different level of demand and have a different impact on a company’s marketing objectives.
Demand and price are inversely related i.e.
Higher the price, lower the demand
Company needs to consider :-
Price sensitivity
Price elasticity of demand

12. What is price elasticity?
This determines the changes in demand with unit change in price
If there is little or no change in demand, it is said to be price inelastic.
If there is significant change in demand, then it is said to be price elastic.

13. Activity based costing
Estimating costs
Fixed costs
Variable costs
Learning curve
Activity based costing
Target costing

14. Pricing methods Markup pricing Target return pricing
Perceived value pricing
Going rate pricing
Sealed bid pricing

15. Pricing methods Markup pricing
The practice of adding a constant percentage to the cost price of an item to arrive at its selling price
For example, if the standard markup in the industry is 20% above cost, the company is likely to consider this figure as the starting place for determining the retail price.

16. Pricing methods Target return pricing
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
Target Price = Desired Profit +Target Cost

17. Pricing methods Perceived value pricing
it is an open line pricing technique where respondents estimate the price of a new product compared to those who are already in the market.
Buyers perception about the product is considered

18. Pricing methods Going rate pricing
Establishing the price for a product or service based on prevalent market prices. This is most common with products that do not vary much from one supplier to another, like steel or fresh meat. in a competitive market situation firms fix a price which is equal to the average price charged by all firms in an industry

19. Pricing methods Sealed bid pricing
Price quotes solicited by governmental and other public agencies to ensure objective consideration of competitive bids.  Like tenders and qoutations

20. Psychological pricing
It is used to lessen the impact of the actual pricing in the consumers mind
It is used as a surrogate to indicate the product quality or esteem

21. Geographical Pricing Different pricing at different locations
Could be in terms of barter, countertrade and foreign currency
Also called as Differential pricing
cvd ( custom duty)

22. Discounts and Allowances
Early payment
Off – season
Bulk purchase
Retail discount
Cash discount
Trade in allowance

23. Reaction to price changes
Customer reaction
Competitor reaction

24. Responding to competitor price changes
Maintain price
Maintain price and add value
Reduce price
Increase price and quality
Launch a low price fighter

25. Pharma pricing Is influenced by regulations
Regulatory authority that governs the pricing policy in pharma industry is NPPA ( national pharmaceutical pricing authority)
And under it NLEM (national list of essential medicines is included in DPCO

26. Pharma pricing

27. THANK YOU -PHARMA STREET