Pricing methods

Welcome to my pricing methods. Pricing (Pricing) is the process by which companies determine the cost of providing goods and services. Price is a factor, the quality of production costs and market prices, competition, market conditions, brands, and goods. The price is also determined by a variety of pricing microeconomic theory. Price is also the basis of the marketing mix 4p and financial models. (There are other factors in the product, promotion, place.) The price is the result of revenues generated during the dot-center 4p to the cost. P However, other marketing factors could lead to a price decrease led to price elasticity or the maximization of profits and benefits.

Price is an automatic or manual process of buying and selling based on the following factors: Fixed production, quantity break, promotion or sales campaign, specific sales terms, secured entry price, shipping and billing invoice date, the combination of multiple orders and production line, and so on. The automation system is required for maintenance and equipment, but several errors can reduce the price. Needs of consumers varies only according to the capacity and willingness to pay to buy the goods. Therefore, the price is an important role in the market. Price traditionally is also the most important factor in determining the consumer to purchase.

The purpose of pricing (Pricing Objective)
    Demand decision (Determine Demand)
    Cost Measurement (Estimate Costs)
    Competitor Analysis (Competitor Analysis)
    Price setting method (Price Method)
    Select the final price (Select Final Price)

Step 1: The purpose of pricing

It determined the object of price setting means that set the price to meet the objectives to be obtained through the price of products or services that are offered on the market now. That is, as the target of the now clear pricing is facilitated. The price of the company has set objectives to survive, to maximize short-term profits, maximizing market share and more.
Step 2: determining demand

Each price leads to different levels of demand. Means is a demand depends on the price. The relationship between price and demand is usually determined by the demand curve. The higher the price is reduced demand. But the relationship of price and demand for each product according to the price sensitivity varies.
Step 3: Cost Measurement

Prior to determining the price now is to be measured the cost spent for the production of products or services. Price is set to a value obtained by adding a profit to the measured cost to do so, the lower limit and the upper limit is set in consideration of the demand, and the consumer, such as willingness to pay for the product. Some companies cover the cost of any such production, distribution, and marketing of the product and the price you want to be guaranteed a fair profit in the light of the efforts and commitment risk. However, if firms set prices to cover the full cost, the net result does not always have money.
Step 4: Competitor Analysis

It analyzes a value of the competitors prior to setting the price. Considering the cost of the competitor, the price, etc. of the reaction for the consumer price should be pricing. If a company has not provided a valuable competitor that value is evaluated to be priced higher than the prices of competitors. On the other hand, if a company does not have the value provided by a competitor should cut the price of its products.
Step 5: price setting method

How to set a price target return rates, etc. There are Determination, Determination worth the price. Price target return crystallography is a method to set the price to achieve a profit margin investment (ROI) that enterprises aim. Worth the price law is relatively without make up the attribute of the goods or service at a lower price to attract stand loyal customers is the pricing methods. There is EDLP (Every Day Low Price) High-low pricing strategy and strategy. EDLP pricing is always set low prices that can be predicted for the discriminating consumer goods prices and reduces uncertainty about how long it takes. On the other hand, High-low pricing Pricing is usually lower than the sales by attracting consumers through the sale EDLP price, but regular and frequent promotions and prices are set higher than EDLP strategy says.
Step 6: Select the final price

My company is considering a consistent pricing policy and corporate marketing activities shall set the price. Companies do not usually set a single price. It sets a pricing structure considering various parameters (geographical demand, time of purchase, warranty period, etc.) to set the price.

The role of prices

Best price meets the following three.

     Achieving the fiscal goals of the company.
     Suitable for prices in the real market.
     To maintain the various other elements of the positioning of the producer (positioning) and the marketing mix (mix market).

Effective price seen in the perspective of the marketer is close to the maximum amount you want to set the price consumers to pay. The economic significance of them as much consumer surplus goes to the producer. Good pricing strategy should be placed on the balance line between the lowest price, highest price.

Here are the various terms and strategies used in pricing.  
Family price (Line pricing)

The price is based on using multiple prices for all the goods that the seller is republished, this is all original price started from 5 to 10 cents an old general store. The basic principle of this is that the base price of all goods appropriately determined by expected customers. This is the advantage of being easy to manage, but there are disadvantages in that the non-resilient or particularly unsuitable price inflation.
Bait Products (Loss leader)

Bait is a commodity product prices are set below the operating margin. This is by inducing consumers by offering cheaper products, which expects to come into the store and buy strategy, along with the many other high-margin products.
The price/quality relationship (Price/quality relationship)

The price/quality relationship is a reflection of whether the majority of customers to think that the high price good quality one. Belief in this relationship plays an important role in the product that can not be experienced (such as services) until use difficult or complex products to test. The greater the uncertainty about the products to more consumers rely on price/quality hypothesis and puts a lot of premium on their payments. As a classic example of Twinkies; may the example of (Twinkie cake) snacks were shed as the quality is lower, then the price decrease. Excessive dependence on the price/quality relationship by the consumer, even when a low quality of goods and services and bear a rise of the price, which ultimately price/quality relationship is no longer applied.
Price premium (Premium pricing)

Premium pricing strategies (also called prestige pricing -prestige pricing-) is important here is the pricing that consumers continue to maintain the highest possible price to pay social status. This product is the very high premium attached shall grant the upscale image of the product or strengthened. Examples of companies that use premium pricing may be an example of Rolex and Bentley. These brands, as well as environmental labeling or the production history, etc. (such as such as "domestic", "organic"), can be applied to a premium price by providing an added value to consumers. This premium of elements reflects an increased production cost. Consumers prefer a product attached to the price premium that reason is as follows:

    Consumers believe that the high prices represent good quality.
    Consumers gain self-esteem by owning the goods. Means belong to a distinct grouping of others.
    They require flawless performance in the consumption of these decisions - the cost of abnormal function of the product should be the best choice because buying too expensive to be different - for example, like an artificial heart.

Demand price (Demand-based pricing)

Demand price is the price determination method according to any perceived value based on consumer demand. This initial high price strategy (market-skimming pricing), market penetration pricing strategy, price discrimination (price discrimination), Revenue Management (yield management), market price (price points), psychological pricing (psychological pricing) , bundle and price (bundle pricing), family price (price lining), worth the price (value-based pricing), premium (premium), including price strategy.
The initial high price strategy

When you first bring your products or services, the initial high price strategy, the market strategy is to deliberately set at a higher price. The more time passes after the price down a little. The strategy to recover the amount initially invested in the market in the short term is intended as a way over time have ensured say Cheung falling prices.
Market penetration pricing strategy

Penetration pricing strategy is the opposite of the above sentence and pricing strategies. This strategy is a pricing strategy that aims to take the market during the low-cost strategy to get as much market share in the market early.

Pricing factors, there are production costs, market costs, competition, market conditions, including the quality of the product.

Pricing used in econometric (econometric) technology model is used to calculate the different prices according to the result of the simulation to be useful, sales and profits to measure the elasticity. More sophisticated tools are used for determining the price of the stock management code (SKU stock-keeping unit) level using a portfolio of products. Dealers are hikes to the maximum benefit of national brands and SKUs using their brand.
Multidimensional price.

Multidimensional pricing is the pricing method used for a number of consumer goods and services against. In general, the price is not the one payment method, the payment method, according to various (monthly payments, the payment amount, installments, etc. Deposits). This method has been studied as damaging a significant impact on the understanding of the process for the prices for the consumer.

Nine kinds of laws on consumer sentiment and price sensitivity

Thomas Nagle (Thomas Nagle) and Reed Holden (Reed Holden) book pricing strategies and tactics (The Strategy and Tactics of Pricing) from consumers of a given price on perception and price sensitivity in accordance with differ purchasing decisions on the impact that nine kinds He described the rules.

    Reference price effect (Reference price effect): The sensitivity for a given product in consumer prices will rise more depending on the price of alternative products. The perceived alternative product is given in various ways depending on the consumer.
    The difficulty of comparison is less sensitive even less sensitive to the price that consumers are aware of and consumer product comparison is difficult days better known to potential alternative products.
    Cost-effective transition (Switching costs effect): Specifically, when consumers change providers for a better product for consumers investing more sensitive to the lower price of the substitutes.
    Price-quality effects (Price-quality effect): consumers are likely to react less sensitive to price when a higher price to represent better quality. Product reflecting this effect include the following: product image (image products), proprietary products (exclusive products [6]), the product of the quality leads minimized.
    Spending effect (expenditure effect): consumers are sensitive to the budget for the prices when it comes to spending a large part.  
    (End-benefit effect): to say the relationship between the overall benefits of a given purchase divided into two parts: the reasoning of demand: consumers are more sensitive
    Share - cost-effectiveness (shared-cost effect): the price of purchase of the buyer shall pay a smaller portion for themselves more and less sensitive to price.
    Equity effect (fairness effect): Consumers are more sensitive to the price when recognition is given purchasing situation as "fair" or "reasonable" range from the outside.
    Framed effects (framing effect): Consumers should respond and react to price sensitive when the damage is greater than the predicted gain, but also more sensitive to the price of a commodity than a bundle of individual products.

The price is determined at the most efficient level of profit. Thereby satisfy three levels of pricing in the industry and market exchange.

     Pricing in the industry is geared to the overall level of economic and industrial changes include changes in consumer demand and supply prices.
     Pricing in the market is tailored to the focus position in accordance with a competitive price compared to a number of different values of comparable competitive products.
     Pricing of the transaction is aligned to focus on managing the implementation of the non-receipt or invoice or the list price of the mentioned discounts.

Micro-marketing (micromarketing) is tailor can be seen in the example of (hand-made, such as clothing, etc.), the pricing mechanism based on a combination of individual customers desired level by a minimum of commercial breaks. In each region, and marketing strategies that examine the characteristics of consumers in each market as much as possible to meet the needs of consumers is primarily based enterprise strategy execution in many offices.

Many companies have outraged the general pricing errors. Mentioned in the paper "Use Suppliers Pricing Mistakes" of Berenstain (Bernstein) outline is as follows.

     The difficulty of controlling discounts
     Sales prices of competitors on the market share and insufficient system
     Price determination by the cost-plus (Cost-plus pricing)
     Practical difficulties of price hikes
     Inconsistencies in the international price
     Payments based on the dollar vs additions profitability measures.
https://www.blogger.com/home