JAIIB Super Notes: If you are preparing for JAIIB- these are a must-have. Visit http://sirfbusiness.blogspot.com for more info.

1. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Pricing
Module D: Support Services
Marketing of Banking Services/Products

2. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
JAIIB – SUPER NOTES
Principles & Practices of Banking: Pricing

3. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Contents
Coverage:
1. Importance of Pricing
2. Objectives of Pricing
3. Factors influencing Pricing
4. Pricing Methods
5. Pricing Strategies
6. Bank Pricing

4. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
IMPORTANCE OF PRICING
1.

5. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Pricing
• Price is the sum value of all the values that consumers
exchange for the benefits or having or using the product or
service

6. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
OBJECTIVES OF PRICING
2.

7. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Objectives
Profit Survival Market Share
Cash Flow Status Quo Product Quality
Communicating
Image

8. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
FACTORS INFLUENCING PRICING
3.

9. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Factors Influencing Pricing
Factors
Internal factors
External factors

10. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
PRICING METHODS
4.

11. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Pricing MethodsCostg-BasedPricing
Mark Up Pricing:
Variable costs and
contribution for fixed
costs
Absorption Cost
Pricing: Margin for profit
Target Return Pricing:
Return on the investment
Marginal Cost Pricing:
Direct variable costs are
fully realized. Only a
portion of fixed costs
may realized
Value-BasedPricing
Perceived Value
Pricing: Buyer’s
perception of value
Value Pricing: Product
with high value at a fairly
low price
Competition-Based
Pricing
Going Rate Pricing:
Based on competitor’s
prices
Auction Type Pricing:
•English Auctions - One seller
many buyer
•Dutch Auctions
•Sealed Bid Auctions
Group Pricing

12. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
PRICING STRATEGIES
5.

13. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Pricing Strategies
Geographical pricing
Price discount and allowances
Psychological pricing
•Loss-leader pricing: Loss is covered by sale
of other items
•Special event pricing
•Cash rebates
•Low-interest financing
•Longer payment terms
•Warranties and service contracts
•Psychological discounting
Promotional pricing
• First degree: Different prices to each
customer depending upon their intensity of
demand
• Second Degree: Lower prices for buyers
of a larger volume
• Third degree: Depending upon class of
buyer:
• Customer Groups: Student, Senior
Citizen
• Product form
• Image pricing
• Channel
• Location
• Time
Discriminatory pricing
Market Skimming Pricing
Market Penetration Pricing

14. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Pricing Strategies
• Product Line Pricing: Developing a
product line
• Captive Product Pricing: Main
product at lower price, ancillary
product at higher price
• Two-Part Pricing: Split into fixed and
variable component
• By-Product Pricing: Byproducts
obtained in production of other
products
• Product-bundling pricing
Product Mix Pricing

15. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
BANK PRICING
6.

16. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Bank Pricing
Bank Pricing:
There are two major costs, which have to be considered while pricing bank products:
• Interest cost
• Servicing cost
Interest cost constitutes 67 % of the price and service cost is around 33 % in any bank product.
Other factors:
• Risk and return
• Monetary policy
• Capital adequacy
• Cost-benefit analysis

17. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
Thank You!
Do you have any questions or queries or some feedback
to give?
Just mark an email to super.msahluwalia@yahoo.com

18. JAIIB – Super-Notes© M S Ahluwalia Sirf Business
M S Ahluwalia, amongst other things, is a visual artist, blogger,
blog designer and of course an MBA and Banker from New
Delhi, India.
To know more about him you may visit his blog-site: Estudiante De La Vida
For more Super-Notes visit: Sirf Business