1. Alexander Consulting Enterprise 9/9/2015 Pricing Strategies

2. Alexander Consulting Enterprise 9/9/2015 1. Pricing Methods “The employer does not pay the salaries. It is the customer who pays for the salaries. The employer is just handling the monetary transaction” Henry Ford

3. Alexander Consulting Enterprise 9/9/2015 - Cost Oriented Full cost pricing: Price = Fixed Cost + Profit + Variable Cost Markup pricing: Price as a percentage of sales Incremental cost pricing: Price is set to cover variable cost only - Demand Orientated Price is set according to the firms estimate of potential buyers’ price elasticity.

4. Alexander Consulting Enterprise 9/9/2015 Skim pricingPenetration pricing - product has strong relative advantage - low elasticity of demand - low competition - product is differentiated and difficult to copy - small total market - economies of scale in production - high elasticity of demand - strong competition - product is not differentiated and easy to copy - large market 2. Skim pricing versus penetration pricing

5. Alexander Consulting Enterprise 9/9/2015 Zeit accumulated Cash Flow Skimming Penetration Cash Flow Pattern of Pricing Strategies

6. Alexander Consulting Enterprise 9/9/2015 3. Legal restrictions of pricing decisions - Dumping - Price fixing - Price discrimination - Price advertising While governmental restrictions on pricing vary among different nations, most developed countries have laws relating to:

7. Alexander Consulting Enterprise 9/9/2015 4. Costs of Exporting Taxes Tariffs Administrative Costs Inflation Exchange Rate Fluctuations Varying Currency Values

8. Alexander Consulting Enterprise 9/9/2015 5. Lessening Price Escalation 1.Lower Cost of Goods  Lower Manufacturing Costs  Eliminate Functional Features  Lower Quality

9. Alexander Consulting Enterprise 9/9/2015 2. Lower Tariffs  Tariff Reclassification  Product Modification  Partial Assembly  Repack aging 3. Lower Distribution Costs  Shorten Channels of Distribution  Lower Shipping Costs 4. Foreign Trade Zones

10. Alexander Consulting Enterprise 9/9/2015 6. Countertrades Barter Compensation Deals Counterpurchase or Offset Trade Product Buy-Back Agreement

11. Alexander Consulting Enterprise 9/9/2015 7. Why Countertrade? To Preserve Hard Currency To Improve Balance of Trade To Gain Access to New Markets To Upgrade Manufacturing Capabilities To Upgrade Manufacturing Capabilities To Maintain Prices of Export Goods

12. Alexander Consulting Enterprise 9/9/2015 8.Transfer Pricing Manipulation of Taxes Manipulation of Duties and Customs Repatriation of Profits Management of Divisions

13. Alexander Consulting Enterprise 9/9/2015 9. Gray Trades Currency Exchange Rate Import Quotas Different Positioning Opportunities for Parallel Imports Arise through Price Differentials