Cost based pricing

 Welcome to my cost based pricing.

INTRODUCTION

All for-profit organizations and many non-profit prices their products or services. Prices have many names: There are prices all around us. We pay rent, tuition for our education, our fees physician or dentist. Airlines, railways, taxis, and trucks charge us a passage; utilities such as electricity and telephone call rates prices; and the bank charges us usury on the money we sharpen. The price of the handle a car for some highways is called fee, and the company that secures our car we feed a premium. The "price of an administration is their salary, the price of a seller could be a commission and the value of a worker's wages. At last, though something economists disagree, many of us feel that taxes are the price we pay for the privilege of earning money.

the steps for pricing and the various methods that companies use to establish the precise selling their products are established in this investigation.

BACKGROUND

For most of history, prices were set by negotiation between those who buy and sell. Set one price for all buyers is a relatively modern idea that emerged with the improvement of casual sales on a large scale at the end of the nineteenth century FW Woolworth, Tiffany & Co., and others published a strict policy of one price for working many articles and so many employees they supervised.

Now, barely a hundred years later, the Internet promises to reverse the trend the trend of fixed prices and take us back to an era of bargain prices. The internet, united networks, and wireless systems are linking people, machines, and companies around the worldwide, and joining those who sell and those who buy as never before. Websites like Compare.Net and PriceScan.com permit buyers to compare manufacture and prices quickly and easily. The online auction sites like eBay.com and Onsale. Com facilitate buyers and sellers to negotiate prices on thousands of items, from refurbished computers to train old tin.

The price has traditionally operated as the main determinant of the purchase decision. This remains true in the impoverished countries, among the impoverished groups and in the case of commodities uniforms While non-price factors have become more important for the buyer behavior in recent decades, the price remains one of the most important elements that decide market share and gainfulness of a company.

Consumers and purchasing agents have access to pricing information and to offer discounted prices. Consumers research their purchases carefully, forcing retailers to lower prices. Retailers pressure on manufacturers to lower their prices. The result is a market characterized by heavy discounts and sales promotion.

How to Price

Price definition:

The price is the element of the marketing mix that produces revenue; others produce costs. The price is also one of the most flexible elements can be changed quickly, unlike product form and channel promise.

At the equal time, price competition is the most serious problem facing businesses. Nevertheless, many companies do not handle pricing.

The most common errors:

    The pricing is too oriented to costs
    Values are not non-persistent often enough to take convenience of market changes
    The price is set independently of the rest of the marketing combination and not as an idiosyncratic element of the strategy of market positioning
    The price is not several sufficient for the different object, market department and buying occasions.

HOW PRICING

A company must put a primary price when growing a new product when you enter your normal product in a new distribution channel or geographical area and when the tender for new contracts.

The company must decide where pocisionará your product in quality and price.

In several markets, such as automobiles, you can discovery up to eight price points:

There may be competition between price segments - standard. The subsequent figure shows nine grand design of price - standard. The diagonals strategies 1, 5 and 9 can coexist in the same market; that is, a company offering a high-quality manufacture at a high price, other offers the average quality product at a median price. The three contestant can coexist in the market both hold three groups of buyers: those who insist on quality, who insist on the price and balance those two considerations.

Strategies 2, 3 and 6 are ways to invasion the diagonal positions. Strategy 2 says: "Our product has the equal high-quality goods1 but charges less." Strategy 3 says the equal and offers even highest savings. If quality sensitive customers believe what these competitors, be sensible buy and save money (unless the product of the company 1 has acquired an attractive).

Positioning strategies 4, 7, and 8 are equivalent to charging an excessive price for the product in relation to its quality. Guests will feel "ripped off" and probably complain or speak ill of the company.

The company has to consider many factors when establishing its pricing policy. We describe a process of six steps: (1) Select the target pricing; (2) determine the demand; (3) estimate the costs; (4) analyze costs, prices, competitors' offerings (5) Choosing a method of pricing; (6) select the final price 

I. SELECTION OF THE OBJECTIVE OF PRICING

The first thing is to decide where the company wants to position its market offering. Much clearer are the objectives of the company, the easier it will set the price: A company can search any of five chief  aims at setting their prices:

    Survival
    Maximum current earnings
    maximum market share
    Maximum capture high-end market
    Product quality leadership

There are also some conditions favoring low fixing:

    The market is very sensitive to price and a low price stimulates their growth
    The production and distribution costs down to go accumulating production expertise
    The low price disheartens real and prospective competition.
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