Pricing for value

1. PRICING DECISIONS: PRICING
CONCEPTS FOR ESTABLISHING
VALUE
PRICING STRATEGIES-VALUE
BASED, COST BASED, MARKET
BASED, COMPETITOR BASED.
Presented by:-
Shruti bansal
Parag aggarwal
Divyansh tyagi
Saloni garg
Priya srivastav

2. WHAT IS PRICE?
 Price is the value exchanged for products in marketing
transactions.
 Price is not always money paid; barter, the trading of
products, is the oldest form of exchange.
 Price is a key element in the marketing mix because it relates
directly to generation of total revenue.

3. PRICING DECISIONS
 Organizations producing goods and services need to set
the price for their product.
 Setting the price for an organization's product is one of the
most important decisions a manager faces.
 It is one of the most crucial and difficult decisions a firm's
manager has to make.

4. FACTORS DETERMINING THE PRICING
DECISIONS
(i) Cost of Production
(ii) Demand for Product
(iii) Price of Competing Firms
(iv) Purchasing Power of Customers
(v) Government Regulation
(vi) Objective
(vii) Marketing Method Used

5. PRICING STRATEGIES
 Pricing strategy is the pursuit of identifying the
optimum price for a product.
This strategy is combined with the other marketing
principles known as the four P's (product, place, price,
and promotion).

6. PRICING STRATEGIES FOR A NEW
PRODUCT
 Pricing strategies usually change as the product passes
through its life cycle.
 Product life cycle
 introductory stage
 growth stage
 maturity stage
 decline stage

7. PRICING STRATEGIES FOR NEW PRODUCT
Market
skimming
pricing
Market
penetration
pricing
High price , low
volume
For product that
have short life
cycle
ex:- apple phone
Low price , high
volume
For product that
have long
anticipated life
cycle
ex:- big bazaar.

8. VALUE BASED PRICING
Practice of setting the price of a product/services at its
perceived value by the customer.
It is usually applied to very specialized services.

9. VALUE BASED PRICING
Advantages
Increases
profits
Customer
loyalty
Disadvanges
Niche market
Not scalable
Competition
Labour costs.

10. COST BASED PRICING :
THE COST OF A PRODUCT
BY ADDING
MANUFACTURING COST
+ % OF PROFIT.

11. COST BASED PRICING
Advantages
 Company knows exactly
amount of expenditure
on making of product.
 Simplest method to
decide the price of
product.
Disadvantages
 Does not take into
account the future
demand for a product.
 Result in overestimating
the price of product
because it include sunk
cost and ignores
opportunity cost.

12. MARKET BASED PRICING
 Process of establishing a price for a product or
service based upon existing market conditions.
 Important to consider only those products that are
similar to the product being offered.
 Higher demand =high price of the product.
 Lower demand =incentives and other discounts can
be offered to keep customer’s interest.

13. COMPETITOR BASED PRICING.
 Setting the price of a product/service based on what the
competitor charges
 Applies when the product has been on the market for a
long time and many substitutes are available for the
product