PRICING

PARAMJIT SHARMA

PRICING

Price is the only Revenue. .. Rest are costs

PARAMJIT SHARMA

WHAT IS PRICE FOR AN OFFERING ?

RENT FOR A BUILDING

PRICING

Tari
Airlines,Rly.,Bus, Cab.Fare

or !hone

E"!ress #ay..Toll

Can it $e !rice %
PARAMJIT SHARMA 3

Price..&uality..Se'(entation
PRICING

SEG)ENT
*+TI)ATE GO+, ST,. +*-*R. SPF. NEE,S )I,,+E EASE/CON0. )E TOO PRICE A+ONE

A*TO)O1I+ES Rolls Royce )erce2es Au2i 0olvo 1uic3 For2 Escort Hyun2ai 4ia

PARAMJIT SHARMA

Price..&uality..Se'(entation
PRICING

SEG)ENT
. +*-*R. SPF. NEE,S )I,,+E CON0. EECONO). )E TOO PRICE A+ONE

A*TO)O1I+ES

)erce2es Hon2a Civic Octavia Cheverolet O!tra Santro Alto )aruti 566

PARAMJIT SHARMA

Price ..&uality .Strate'ies

Price
Hi'h H
Pro2uct &uality

PRICING lo# 9 Su!er value strate'y < Goo2 value Strate'y > Econo(y Strate'y
6

)e2 8 Hi'h value strate'y ; )e2iu( 0alue St'. 5 False Econ. Strate'y
PARAMJIT SHARMA

7 Pre(iu( Strate'y

: Overchar'in' ) strate'y = Ri! o Strate'y

Price ..&uality .Strate'ies

Price
Hi'h H
Pro2uct &uality

PRICING lo# 9 Su!er value strate'y < Goo2 value Strate'y > Econo(y Strate'y
7

)e2 8 Hi'h value strate'y ; )e2iu( 0alue St'. 5 False Econ. Strate'y
PARAMJIT SHARMA

7 Pre(iu( Strate'y

: Overchar'in' ) strate'y = Ri! o Strate'y

Price ..&uality .Strate'ies

Price
Hi'h H
Pro2uct &uality

PRICING lo# 9 Su!er value strate'y < Goo2 value Strate'y > Econo(y Strate'y
8

)e2 8 Hi'h value strate'y ; )e2iu( 0alue St'. 5 False Econ. Strate'y
PARAMJIT SHARMA

7 Pre(iu( Strate'y

: Overchar'in' ) strate'y = Ri! o Strate'y

Price ..&uality .Strate'ies

Price
Hi'h H
Pro2uct &uality

PRICING lo# 9 Su!er value strate'y < Goo2 value Strate'y > Econo(y Strate'y
9

)e2 8 Hi'h value strate'y ; )e2iu( 0alue St'. 5 False Econ. Strate'y
PARAMJIT SHARMA

7 Pre(iu( Strate'y

: Overchar'in' ) strate'y = Ri! o Strate'y

Perceived Delivered Value H Missing Opportunity PRICING

Price = Value

Un harvested Value L M Value Received

PARAMJIT SHARMA

H
10

Price Paid

Factors in settin' Prices

PRICING 7 Selectin' !ricin' o$Aective 2 Determining Demand 9 Esti(atin' costs

:
Analysin' co(!etitors Costs?!rices @ o ers ; Selectin' !ricin' )etho2 < Selectin' the inal Price
PARAMJIT SHARMA 11

SELECTING PRICING OB ECTI!E PRICING

Survival
)a"i(iBin' Current Pro it

)a". )ar3et Share )a". )ar3et S3i((in'

)a"i(isin' Pro2uct &uality
N"n Pr"#i$ Or%ani&a$i"ns.
PARAMJIT SHARMA 12

DETER'INING DE'AND
PRICING

Price Sensitivity Esti(atin' 2e(an2 curves Price elasticity o 2e(an2

PARAMJIT SHARMA

13

Price Sensitivity
PRICING

*niCue value e ect Su$stitute a#areness e ect ,i icult co(!arison e ect Total e"!en2iture e ect En2 $ene it e ect Share cost e ect Sun3 invest(ent e ect Price Cuality e ect Inventory e ect
PARAMJIT SHARMA 14

'easurin% De(an)*Pri+e Rela$i"ns,i-

PRICING

Statistical Analysis Con2uctin' Price E"!eri(ents 1uyers Surveys

PARAMJIT SHARMA 15

Pri+e Elas$i+i$y "# De(an)

PRICING
A Inelas$i+ )e(an) B Elas$i+ )e(an)

-ri+e

oo

!"

Pri+e
.$y. )e(an)e) -er -eri") "! "! .$y. )e(an)e) -er -eri")
PARAMJIT SHARMA 16

/ Es$i(a$in% C"s$s #Ty-es 0 le1el "# -r"). #A++u(ula$e) Pr")u+$i"n #Di##eren$ia$e) (2$% O##er #Tar%e$ +"s$in%

PRICING

PARAMJIT SHARMA

17

Ty-es "# +"s$s 0 le1el "# Pr")u+$i"n

+"s$ be,a1i"ur in a #i3e) si&e -lan$
A

+"s$ be,a1i"ur "1er )i##. si&e -lan$

B

PRICING

C"s$ -er uni$

C"s$ -er uni$

1444 .$y. -r")u+e) -er )ay

.$y. -r")u+e) -er )ay

$
18

PARAMJIT SHARMA

A++u(ula$e) Pr")u+$i"n
PRICING 14
C"s$ -er uni$

7 8 6 5 1 5 6 A++u(ula$e) Pr")u+$i"n
PARAMJIT SHARMA

7
19

PRICING

6 ANAL9SING CO'PETITORS: COSTS PRICES 0 OFFERS

PARAMJIT SHARMA 20

SELECTING PRICING 'ET<OD 'AR= UP PRICING TARGET RETURN PRICING PERCEI!ED !ALUE PRICING !ALUE PRICING GOING RATE PRICING %&'L&D BID PR()(*+
PARAMJIT SHARMA

PRICING

21

SELECTING A PRICING 'ET<OD

T<REE Cs '")el PRICING

<IG< PRICE

N" P"ssible )eiling Price )e(an)

Cus$"(ers Assess(en$ "# UPF

)omp price %u./Price Ortn,Price

)osts -loor Price

L"> -ri+e N" P"ssible -r"#i$

PARAMJIT SHARMA

22

Mar0up Pricing
<IG<

PRICING

Unit )ost Rs2! 1111111111111111111111 =111111 = Rs2" 2 1 Desired Return3 1!,2

PARAMJIT SHARMA

Seas"nal Sl"> '"1in% <i%, S$"ra%e Li#e sa1in% Dru%s

23

Tar%e$ Re$urn Pri+in%

PRICING

Desired Return4 (nvested )ap Unit cost 5 1111111111111111111111111111111111 Unit %ales

PARAMJIT SHARMA

24

Per+ei1e) !alue Pri+in%

PRICING %t, O66er Premium O66er
>i$,in 1>2 $"$al sys$e( <i%, R 0 ) L"+al

'ttri.utes
.uali$y Deli1ery Sys$e( Inn"1a$i"n Ser1i+e

'dded Value
1;4 54 74 /44 ;4

I(-uri$ies14? Less $,an 1? >i$,in 5 >2s su--ly +,:+al less R0 D Re%i"nal

PARAMJIT SHARMA

25

V'LU& PR()(*+

PRICING

&DLP

)harging lo7 6or High 8uality 9al1Mart

PARAMJIT SHARMA

26

Save up to 80% on 2002's hottest toys!

:
: :

PRICING
::::::::::::::::::::::::::::: :::::::::::::

$38.00
Was: $69.77
:

PARAMJIT SHARMA

27

PRICING

;2< 9as ;32

; =2 9as ;23

;$ 9as ;<

PARAMJIT SHARMA

28

See the Big Games on a New TV

:

::

PRICING
The football playoffs are starting, so get ready with a flatscreen odel, pro!ection T" or an #$T"%
:

Philips 50-inch Digital HDTV Monitor 50PP9202

$1,654.00
:

::

9as
PARAMJIT SHARMA

; >?$ 29

'uction Pricing

PRICING

&nglish 'uctions

Dutch 'uctions

%ealed1@id 'uctions

PARAMJIT SHARMA

30

&66ects on Di66erent @ids PRICING

'#d 9500 10000 10500 11000

P !"#t 100 600 1100 1600

P !$ !" Expected %ett#&% $#d p !"#t 81% 81 36 9% 1%

PARAMJIT SHARMA

216 99 16
31

SELECTING T<E FINAL PRICE

' ' In# l uen +e

/
6

( " C
I( -

y n -a

PP

PRICING

Ps

y+

,"

% " l

l a i+

a+ $

"n

"$

,e rs
32

PARAMJIT SHARMA

'dapting the Price

PRICING

Ge"%ra-,i+al )e(an) 0 +"s$s 'ar2e$ Se%(en$ Re@uire(en$s Pur+,ase Ti(in%s Or)er le1els Deli1ery Fre@uen+y Ser1i+e C"n$ra+$s Guaran$ees
PARAMJIT SHARMA 33

Ge"%ra-,i+al Dis+"un$s 0 All">an+es Pr"("$i"nal Dis+ri(ina$"ry

PARAMJIT SHARMA

PRICING

A)a-$in% T,e Pri+e

34

+eographical
Di66erent or same priceAA Ho7 to get paid

PRICING

#Bar$er #C"(-ensa$i"n Deal #Buyba+2 #"##se$

PARAMJIT SHARMA 35

Price Discounts B 'llo7ances

PRICING

Cas, Dis+"un$s .uan$i$y Dis+"un$s Fun+$i"nal Dis+"un$s Seas"nal Dis+"un$s All">an+e Crade1in1'llo7ance Promotional 'llo7ance

PARAMJIT SHARMA

36

Promotional Pricing

PRICING

L"ss Lea)er S-e+ial E1en$s Cas, Reba$es L"> in$eres$ Finan+in% L"n%er Pay(en$ Ter(s Aarran$ies 0 Ser1i+e C"n$ra+$s Psy+,"l"%i+al Dis+"un$in%

PARAMJIT SHARMA

37

Discriminatory Pricing

PRICING

)ustomer %egment Pricing1Museums Product -orm Pricing1)ola Pac0ing (mage Pricing1Per6umes )hannel Pricing1Rly %tation,,CheatreA" star Location Pricing1@alcony,,Dress circle Cime Pricing,,seasonsA,dayAnight

PARAMJIT SHARMA

38

Pr")u+$ Line Pri+in% O-era$i"nal #ea$ure Pri. Ca-$i1e Pr")u+$ Pri+in% Pr")u+$*'i3 T>" -ar$ Pri+in% Pri+in% By Pr")u+$ Pri+in% Pr")u+$ Bun)lin% Pri+in%

PRICING

PARAMJIT SHARMA

39

PRICING

INITIATING PRICE CUTS

#Lo7 8uality trap #-ragile mar0et share trap #%hallo7 poc0et trap

PARAMJIT SHARMA

40

PRICING

INITIATING PRICE INCREASE

Over Demand (n6lation

PARAMJIT SHARMA

41

PRICING

Res-"nse T" O1er )e(an) Ai$,"u$ Raisin% Pri+e

S,rin2in% $,e -r")u+$ Subs$i$u$e (a$erials Re)u+in% -r")u+$ #ea$ures Re). Pr")u+$ ser1i+es Usin% less Pa+. 'a$. Re). T,e N". "# si&es Crea$in% e+"n"(y bran)
PARAMJIT SHARMA 42

PRICING Rea+$i"ns T" Pri+e C,an%es

CUSTO'ERS

CO'PETITORS

PARAMJIT SHARMA

43

PRICING

'ain$ain -ri+e 0 'ain$ain -ri+e 0 a)) 1alue Re)u+e -ri+e In+rease -ri+e 0 I(-r"1e @uali$y Laun+, a l"> -ri+e #i%,$er line
PARAMJIT SHARMA

Res-"n)in% $" C"(-e$i$"rs Pri+e +,an%es

44

PRICING

PARAMJIT SHARMA

45