© 2002 mcgraw-hill companies, inc., mcgraw-hill/irwin steps in setting price
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© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Steps in setting priceSteps in setting price
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
STEP 4: SELECT AN APPROXIMATE PRICE LEVEL
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Demand-Oriented Approaches• Skimming Pricing
• Penetration Pricing
• Prestige Pricing
• Price Lining
STEP 4: SELECT AN APPROXIMATE PRICE LEVEL
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Demand curves for two types of demand-oriented Demand curves for two types of demand-oriented approachesapproaches
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Demand-Oriented Approaches
• Odd-Even Pricing
• Target Pricing
• Bundle Pricing
• Yield Management Pricing
STEP 4: SELECT AN APPROXIMATE PRICE LEVEL
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Cost-Oriented Approaches• Standard Markup Pricing
• Cost-Plus Pricing
• Experience Curve Pricing
STEP 4: SELECT AN APPROXIMATE PRICE LEVEL
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Profit-Oriented Approaches• Target Profit Pricing
• Target Return-on-Sales Pricing
• Target Return-on-Investment Pricing
STEP 4: SELECT AN APPROXIMATE PRICE LEVEL
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Competition-Oriented Approaches• Customary Pricing
• Above- At- or Below- Market Pricing
• Loss-Leader Pricing
STEP 4: SELECT AN APPROXIMATE PRICE LEVEL
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• One-Price versus Flexible-Price Policy
STEP 5: SET THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
One-Price Policy
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Company, Customer, and Competitive Effects• Company Effects
Product-line pricing
• Customer Effects
STEP 5: SET THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Frito-Lay ProductsSubstitutes and complements:
Information for product-line pricing
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Company, Customer, and Competitive Effects (cont)• Competitive Effects
Price war
• Balancing Incremental Costs and Revenues
STEP 5: SET THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The power of marginal analysis in real-world decisionsThe power of marginal analysis in real-world decisions
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
STEP 6: MAKE SPECIAL ADJUSTMENTS TO THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Discounts• Quantity Discounts
• Seasonal Discounts
• Trade (Functional) Discounts
• Cash Discounts
STEP 6: MAKE SPECIAL ADJUSTMENTS TO THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Toro AdSeasonal discounts
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The structure of trade discountsThe structure of trade discounts
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Allowances• Trade-In Allowances
• Promotional Allowances Everyday low pricing
• Geographical Adjustments• FOB Origin Pricing
• Uniform Delivered Pricing
• Basing-Point Pricing
STEP 6: MAKE SPECIAL ADJUSTMENTS TO THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
• Legal and Regulatory Aspects of Pricing• Price Fixing
• Price Discrimination
• Deceptive Pricing
• Geographical Pricing
• Predatory Pricing
STEP 6: MAKE SPECIAL ADJUSTMENTS TO THE LIST OR QUOTED PRICE
© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Pricing practices affected by legal restrictionsPricing practices affected by legal restrictions