Chapter-10
Pricing: Understanding and Capturing Customer Value
1.
Price: In the narrowest sense, price is the amount of
money charged for a product or service. More broadly, price is the sum of all
the values that customers give up in order to gain the benefits of having or
using a product.
2.
Price
Celling: Customers’ perceptions of the products’ value set
the celling for prices. If customers perceive that the price is greater than
the product’s value, they will not buy the product. In essence, no demand above
the price.
3.
Price
Floor: Product’s costs set the floor for prices. If the
company prices the product below its cost, the company’s profit will suffer. In
essence, no profits below this price.
4.
Value-based pricing: Value-based
pricing uses buyers’ perceptions of value, not the seller’s cost. It means
setting prices based on buyers’ perceptions of value rather than on the seller’s
cost.
5.
Good-value pricing:
It means offering just the right combination of quality and good service at a
fair price.
6.
Value-added pricing:
To increase their pricing power, many companies adopt value-added pricing
strategies rather than cutting prices to match competitors, they attach value-added
features and services to differentiate their offers and thus support higher
prices.
7.
Cost-based pricing: Cost-based
pricing involves setting prices based on the costs for producing, distributing
and selling the product plus a fair rate of return for its effort and risk.
8.
Fixed cost:
Costs that do not vary with production or sales level.
9.
Variable cost:
Costs that vary directly with the level of production.
10. Total cost: The sum of the fixed and variable
costs for any given level of production.
11. Break-even analysis: Setting price to break even on the costs of making and marketing a
product or setting the price to make a target profit.
1 Comments
Good. Study is Going on
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