Setting the price

Presented by :Neha koul -Shumali -Vasudha dogra - 67Vidhu arora - 68Arjit gupta - 69Anchal gupta - 70Ridham mahajan -71

What is price ? Price is the one element of the marketing mix that produces revenue

The amount paid for some goods and services.

Pricing is the process whereby a business sets the price at which it will sell its products and services.

Steps in setting price

Step 1: Selecting the Pricing Objective

Survival

Maximum current profit

Maximum market share

Maximum market skimming

Product-quality leadership

Clearer a firms’ objectives, easier it is to set the price.There are five major objective are :

Step 2: Determining Demand

Price

demand

Sensitive : regular items Less sensitive: no substitute, Addiction, infrequently used items

Price

Sensitivity

Surveys Price experiments Statistical analysis

Estimating

demand curve

Elastic demandInelastic demand

Price

elasticity of demand

Step 3: Estimating Costs

Fixed Cost

Variable Cost

Total Cost

Price which covers at least total cost of production at the given level of production is selected.

Step 4 :Analyze competitors’ costs, prices and offers

Offers

Less features

Subtract that value from their own price

More features

Add value to the competitors price

Step 5: Selecting a Pricing Method

Consideration in price setting : 3C’s

• costs set floor to the price • competitors prices and substitute prices provide an orienting

point.• customers’ assessment of unique features establishes ceiling price.

Price setting methods :

• Markup pricing• Target-return pricing• Perceived-value pricing• Value pricing• Everyday low pricing• Going rate pricing• Auction-type pricing

Step 6: Selecting The Final Price

Pricing methods narrow the range from which company must select its final price.

Too high few

buyers

Priced right ???

Too lowToo many buyers