Pricing

Handyanto Widjojo
[email protected]
Points - Today
 Elements of Price Planning
 Pricing Objectives
 Estimate Demand
 Pricing for StartUp
 Psychological, Legal, and Ethical
Aspects
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Elements
of Price
Planning

Solomon et al. (2018) 3

Step 1:
Pricing
Objectives

Solomon et al. (2018)

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 Step 2:
Cost, Demand,
Revenue

Solomon et al. (2018)

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 Step 2:
Cost, Demand,
Revenue (cont.)

Solomon et al. (2018)

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Step 3:
Determine
Costs

Solomon et al. (2018)

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 Step 3:
Determine
Costs
(cont.)

Solomon et al. (2018)

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Step 4: Economy
Examine the
Competition
Pricing
Environment Government Regulation
Consumer Trends
International Environment

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Step 5:
Pricing
Strategy

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Cost-plus pricing:
A method of setting prices in which the seller totals all the costs
for the product and then adds an amount to arrive at the selling
price

Demand-based pricing:
A price-setting method based on estimates of demand at different price
Target costing:
A process in which firms identify the quality and functionality
needed to satisfy customers and what price they are willing to
pay before the product is designed; the product is
manufactured only if the firm can control costs to meet the
required price.
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Yield management pricing (Differential pricing)
A practice of charging different prices to different customers in order to
manage capacity while maximizing revenues

Competitive Pricing
Price leadership:
A pricing strategy in which one firms in the industry follow with the
same or very similar prices
Consumer’s Need-Based Pricing
Value pricing/Everyday low price pricing:
A pricing strategy in which a firm sets prices that provide ultimate
value to customers

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New Product Pricing
Skiming price:
A very high, premium price that a firm charges for its new, highly
desirable products
Penetration pricing:
A pricing strategy in which a firm introduces a new product at a very
low price to encourage more customers to purchase it

Trial pricing:
Pricing a new product low for a limited period of time in order to
lower the risk for a customer

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Step6:
Pricing
Tactics

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Pricing for Individual Products

Two-part pricing:
Pricing that requires two seperate types of payments to purchase the product.

Payment pricing:
A pricing tactic that breaks up the total price into smaller amounts
payable over time.

Decoy pricing:
A pricing tactic where a seller offers at least three similar products; two
have comparable but more expensive prices and one of these two is
less attractive to buyers, thus causing more buyers to buy the higher
priced more attractive item.
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Pricing for Multiple Products

Price bundling:
Selling two or more goods or services as a single package for one price

Captive pricing:
A pricing tactic for two items that must be used together; one item is
priced very low, and the firm makes its profit on another, high-margin
item essential to the operation of the first item

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Distribution-Based pricing
FOB origin pricing:
A pricing tactic in which the cost of transportating the product from the
factory to the customer’s location is the responsibility of the customer.
FOB delivered pricing:
A pricing tactic in which the cost of loading and transporting the
product to the customer is included in the selling price and is paid
by the manufactirer.
Uniform delivered pricing:
A pricing tactic in which a firm adds a standard shipping charge to
the price for all customers regardless of location.
Freight absorpsion pricing:
A pricing tactic in which the seller absorbs the total cost of
transportation.
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Distribution-Based pricing

Uniform delivered pricing:

A pricing tactic in which a firm adds a standard shipping charge to the
price for all customers regardless of location

Freight absorption pricing:

A pricing tactic in which the seller absorbs the total cost of
transportation

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Discounting for Channel Members

Trade discount:
Discounts off list price of products to members of the channel of
distribution who perform various marketing functions.
Quantity discounts:
A pricing tactic of charging reduced prices for purchases of large
quantities of a product.
Cash discounts:
A discount offered to a customer to entire them to pay their bill quickly
Seasonal discounts:
Price reductions offered only during certain times of the year.

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Pricing and
Electronic
Commerce

 Dynamic Pricing
 Internet Price Discrimination
 Online Auction
 Freemium Pricing

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Psychological,
Legal, and
Ethical
Aspects

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References

Solomon, M. R., Marshall, G. W., & Stuart, E. W. (2018). Marketing: real people,
real choices. London: Pearson.

Chaffey, D & Ellis-Chadwick, F. (2016). Digital Marketing. London: Pearson.

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Thanks!
You can find me at
￮ [email protected]
￮ 0818 861147

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