https://training-course-material.com/index.php?action=history&feed=atom&title=A_Practical_Guide_to_Successful_Pricing_StrategiesA Practical Guide to Successful Pricing Strategies - Revision history2026-05-13T23:42:11ZRevision history for this page on the wikiMediaWiki 1.45.1https://training-course-material.com/index.php?title=A_Practical_Guide_to_Successful_Pricing_Strategies&diff=11075&oldid=prevIzabela Szlachta at 19:11, 13 June 20132013-06-13T19:11:46Z<p></p>
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<slideshow style="nobleprog" headingmark="⌘" incmark="…" scaled="true" font="Trebuchet MS" ><br />
;title: A Practical Guide to Successful Pricing Strategies<br />
;author: Phillip Mayer BSc (Econ) FIC MIoEE NLPdip (NobleProg Ltd)<br />
</slideshow><br />
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== Domestics ⌘==<br />
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== Introductions ⌘==<br />
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* Who are you?<br />
* What do you do?<br />
* What would you like to get from today?<br />
* What is your market situation?<br />
* What are you trying to achieve?<br />
* Which is your preferred strategy and why?<br />
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== Pricing of goods / services ⌘==<br />
# Exploring the variety of pricing strategies and identifying which is most relevant to you<br />
# Managing pricing within product life cycle<br />
# Developing tactics that support pricing objectives<br />
# How to avoid price wars?<br />
# Price and Profit: the dangers of discounting<br />
# Price adapting and manipulating. Ways to make a price seem low<br />
# Price flexibility: key factors and ways of calculation<br />
# Choosing the right pricing strategy for your products and services on the local marke<br />
== International Pricing Strategies ⌘==<br />
# Understanding pricing in your specific markets from an international perspective<br />
# Differences in pricing the consumer goods on the international market.<br />
# Regional examples: Middle East, Eastern and Central Europe, Asia, North America.<br />
# Actual pricing situations in your markets. Pricing strategies relevant to you and your competitors.<br />
# Choosing the right strategy for your products and services across international markets<br />
== Penetration Pricing ⌘==<br />
# Price set to ‘penetrate the market’<br />
# ‘Low’ price to secure high volumes<br />
# Typical in mass market products – chocolate bars, food stuffs, household goods, etc.<br />
# Suitable for products with long anticipated life cycles<br />
# May be useful if launching into a new market<br />
== Market Skimming ⌘==<br />
* High price, Low volumes<br />
* Skim the profit from the market<br />
* Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out)<br />
* Examples include: Playstation, jewellery, digital technology, new DVDs, etc.<br />
* Many are predicting a firesale in laptops as supply exceeds demand.<br />
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== Value Pricing ⌘==<br />
* Price set in accordance with customer perceptions about the value of the product/service<br />
* Examples include status products/exclusive products<br />
* Companies may be able to set prices according to perceived value.<br />
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== Loss Leader ⌘==<br />
# Goods/services deliberately sold below cost to encourage sales elsewhere<br />
# Typical in supermarkets, e.g. at Christmas, selling bottles of gin at £3 in the hope that people will be attracted to the store and buy other things<br />
# Purchases of other items more than covers ‘loss’ on item sold<br />
# e.g. ‘Free’ mobile phone when taking on contract package<br />
== Psychological Pricing ⌘==<br />
# Used to play on consumer perceptions<br />
# Classic example - £9.99 instead of £10.99!<br />
# Links with value pricing – high value goods priced according to what consumers THINK should be the price<br />
== Going Rate (Price Leadership) ⌘==<br />
# In case of price leader, rivals have difficulty in competing on price – too high and they lose market share, too low and the price leader would match price and force smaller rival out of market<br />
# May follow pricing leads of rivals especially where those rivals have a clear dominance of market share<br />
# Where competition is limited, ‘going rate’ pricing may be applicable – banks, petrol, supermarkets, electrical goods – find very similar prices in all outlets<br />
== Tender Pricing ⌘==<br />
# Many contracts awarded on a tender basis<br />
# Firm (or firms) submit their price for carrying out the work<br />
# Purchaser then chooses which represents best value<br />
# Mostly done in secret<br />
== Price Discrimination ⌘==<br />
* Charging a different price for the same good/service in different markets<br />
* Requires each market to be impenetrable<br />
* Requires different price elasticity of demand in each market<br />
* Prices for rail travel differ for the same journey at different times of the day<br />
[[File:Station.jpg]]<br />
== Destroyer/Predatory Pricing ⌘==<br />
# Deliberate price cutting or offer of ‘free gifts/products’ to force rivals (normally smaller and weaker) out of business or prevent new entrants<br />
# Anti-competitive and illegal if it can be proved<br />
== Absorption/Full Cost Pricing ⌘==<br />
# Full Cost Pricing – attempting to set price to cover both fixed and variable costs<br />
# Absorption Cost Pricing – Price set to ‘absorb’ some of the fixed costs of production<br />
== Marginal Cost Pricing ⌘==<br />
# Marginal cost – the cost of producing ONE extra or ONE fewer item of production<br />
# MC pricing – allows flexibility <br />
# Particularly relevant in transport where fixed costs may be relatively high<br />
# Allows variable pricing structure – e.g. on a flight from London to New York – providing the cost of the extra passenger is covered, the price could be varied a good deal to attract customers and fill the aircraft<br />
== Marginal Cost Pricing - Example ⌘==<br />
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* Aircraft flying from Bristol to Edinburgh – Total Cost (including normal profit) = £15,000 of which £13,000 is fixed cost*<br />
* Number of seats = 160, average price = £93.75<br />
* MC of each passenger = 2000/160 = £12.50<br />
* If flight not full, better to offer passengers chance of flying at £12.50 and fill the seat than not fill it at all!<br />
<small>*All figures are estimates only</small><br />
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== Contribution Pricing ⌘==<br />
# '''Contribution = Selling Price – Variable (direct costs)'''<br />
# Prices set to ensure coverage of variable costs and a ‘contribution’ to the fixed costs<br />
# Similar in principle to marginal cost pricing<br />
# Break-even analysis might be useful in such circumstances<br />
== Target Pricing ⌘==<br />
# Setting price to ‘target’ a specified profit level<br />
# Estimates of the cost and potential revenue at different prices, and thus the break-even have to be made, to determine the mark-up<br />
# Mark-up = Profit/Cost x 100<br />
== Cost-Plus Pricing ==<br />
# Calculation of the average cost (AC) plus a mark up<br />
# AC = Total Cost/Output<br />
== Summary ⌘==<br />
* What did you get out of today?<br />
* What is your market situation?<br />
* What are you trying to achieve?<br />
* Which is your preferred strategy and why?<br />
* Next steps ...<br />
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== Useful Links and Sources ⌘==<br />
# www.bized.co.uk<br />
# Price Wars - Wikipedia<br />
# Pricing Strategies - Wikipedia<br />
# Product lifecycle management (PLM) - Wikipedia<br />
# Revenue Management - Wikipedia<br />
# Costing and Pricing - Cobweb<br />
== Any questions? ⌘==<br />
<big>Questions & Answers</big><br />
[[File:Foco.jpg|250px]]</div>Izabela Szlachta