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Description
The sum of cost plus a profit margin is taken.
We consider total cost plus pricing and with
variable cost it is marginal costing
Instances/Example
Total cost including
fixed and variable cost
AC+ m
Price is very competitive and base price is less Variable cost is taken
than in case of full cost pricing. It is the sum
instead of total cost.
of variable cost plus a profit margin
Penetration pricing
Price skimming
Value pricing
Oligopoly asbestos
and aluminum
Is adopted when most of the players do not
In monopolistic
indulge in separate pricing but prefer to
market products like
follow the prevailing market price.
pasteurized milk,
cosmetics, soft drinks,
good soap, soft tooth
brush
An intelligent firm will devise different
Introduction stage:
pricing for a product at different stages of its
internet facility, first
lifecycle. Pricing for a product is based on
TV with flat screen,
different stages like introduction, growth,
cellular phone.
maturity, saturation, decline
Growth stage charging
lower price from
residual customer
since product has
already created its
own market . In
maturity stage sellers
try to woo the
customers by
discounts, buy pack,
product bundling,
advertisements. R&D
producers charge a very high price in the
Elasticity of demand
beginning to skim the market and earn super
is governed by status
margins on sales
symbol factor and not
by intrinsic value of
the product
Two or more products are handled for a single Super fast trains
price.
provide food and
bedding as part of the
train fare (Rajdhani
express and Shatabdi
express)
Value of goods for different consumers
Parker pens, Tanishq
depends upon their perception of utility of the jewellery, Phillips
good
products, Titan
watches
sellers try to create a high value of the product Koutons brand of
and charge a low price.
mens wear
Cyclical pricing
durables during
prosperity with
increase in sales
encourages
employment,
production, income
and thus demand.
Reverse situation may
happen during
recession
With more emphasis
on cost and quality
Rigid pricing
Flexible pricing
firms should keep their prices flexible in order FMCG goods and
to meet the challenges of increasing (or
agricultural products
decreasing) demand
Ramsay pricing
Transfer pricing
construction,
procurement of goods,
vehicles, machinery
are done through
tendering
Upper limit pricing
(Maximum retail
price) plus
commission
Retail pricing
Export pricing
Administered pricing
mechanism
Dumping
unknown demand,
unpredictable
attitude, medium of
exchange, risk in
exchange
Products like steel,
fertilizers, coal,
sugarcane are
identified for APM
WTO and members
initiatives, also
antidumping measures
taken against imports
and tariffs imposed on
consumer goods like
cell batteries, sports
shoes and china toys