PRESENTED BY:

SHEFALI TALWAR MS-A-01

URVASHI KAPOOR MS-A-02
MANPREET SINGH GANDHI MS-A-03
PAYAL BAHL MS-A-05
VARUN SHARMA MS-A-08
Price is the value placed on what is exchanged,
it is the point at which the exchange between the
buyer &seller takes place, where supply&
demand are equal.
 Arriving at the right price for a product or
service is one of the most difficult task today
various factors need to be considered before
setting up an appropriate price.
 Pricing is an integral part of retail strategy
and cannot work in isolation. Cost and
Operating expenses need to be considered while
establishing the retail price.
 Price is an integral element of retail
marketing mix. it is the factor which is the
source of revenue for the retailer.
The price of a merchandise also
communicates the image of the retail store to
the customers.
 Various factors like the target market,
store policies competition and economic
condition need to be taken into consideration
while setting up an appropriate price for a
product.
Factors to be considered while
setting up an appropriate price are:
The primary factor that need to be considered while
arriving at a pricing strategy is the business model that
the retailer has chosen to follow.
The next factor to be taken into consideration is the
demand for the product and the target market.
The store policies and the store image.
Competition for the product & competitor’s price for
the similar products.
The economic conditions prevalent at times play a
major role in pricing policy.
FACTORS TO BE CONSIDERED WHILE PRICING A PRODUCT.
 The first element to be considered in
the cost of goods which is the cost of
merchandise and various other
expenses, which are involved in the
movement of goods from the
manufacturer to the actual store. These
expenses may be fixed or variable.
 Fixed costs are referred to as
overhead, are the expenses that
don’t vary according to the
production amounts-such as
rent for office space, office
equipments,insurance,utilitiese
tc.
 These are the expenses that
do vary with the amount of
service provided or goods
produced. They include costs
such as hourly pay for a
contractor on a specific
project, raw-materials etc.
 Before determining the price of the
product, one needs to determine the
cost of the product and take into
consideration the “Break-Even” point.
It is the point at which the retailer neither
makes or loses money in producing a
product or delivering a service.
It is the process used to uncover the break
even numbers.
Before calculating the break-even point, it
is necessary to determine the fixed as well as
the incremental cost per unit[variable cost]
To calculate the Break-even point, the point at
which the business will neither make a profit or a
loss, the following formula can be used:

 Break even revenue = Fixed costs

1-Variable cost per unit
It is the difference between the cost of the product and the final
selling price.
The mark up can be in rupee terms or in terms of percentage.
Mark ups can also be calculated on the cost of the product or the
retail price.
A markup can be expressed as an either a rupee amount or as a
percentage of selling price.
A rupee markup occurs when the retailer adds a fixed amount to
the cost of the product.

a) Markup% (at retail)=(retail selling price-merchandise cost)

Determines the retail selling price.
b) Markup% (at cost)=(retail selling price-merchandise cost)
Determines the merchandise cost.
Cumulative markup:
The cumulative markup is calculated for a group of
products.

Initial markup:
It is the difference between the cost price of the
merchandise and the initial retail price.

Maintained markup:
It is the difference between the gross merchandise cost
and the actual selling price.
The pricing policy adopted by the
retailer can be:
Cost-oriented pricing
Demand-oriented pricing
Competition-oriented pricing
Cost-oriented pricing:
In Cost-oriented pricing, A basic mark-up is
added to the cost of the merchandise to arrive at
a price.

Here retail price is considered to be the function

of cost and markup.

Thus,
Retail price = Cost + Markup
Markup = Retail price - Cost
Demand-oriented pricing
This policy focuses on the quantities that the
customers would buy at various prices.
It largely depends upon the perceived value
attached to the product by the customer.
As, sometimes high priced product is perceived
as being of high quality and a low priced product
is perceived as being of low-quality.
An understanding of the target market and the
value proposition is the key to demand oriented
pricing.
Competition-oriented pricing
 When the prices adopted by the competitors play
a key role in determining the price of the product,
then it is said to be competition oriented pricing.

Here the retailer may price the product at par

with the competition.

That is; above the competitor’s price or below the

price.
THE PRICING STRATEGIES BEING ADOPTED BY
THE RETAILER INCLUDES:

1.MARKET- 4.LEADER 7. ODD-

SKIMMIMG PRICING PRICING
2.MARKET 5.MULTI-UNIT
PENETRATION PRICING 8.SINGLE
3PRICE 6.EVERY DAY PRICING
BUNDLING LOW PRICING 9.MULTIPLE
PRICING
The strategy is to charge “High prices” initially and
then to reduce them gradually.

The success of a price skimming strategy is largely

dependent on the “Inelasticity of Demand” for the
product.

The main objective of employing a price skimming

strategy is to benefit from short-term profits and
from effective market segmentation.
 This strategy aims at acquiring a larger market
share by charging “Low Prices”

Retailers who wish to enter a new market or build

on relatively a small market share often use this
strategy.

This strategy will only be possible where the

demand of the product is believed to be “Highly
Elastic”.
 This form of pricing is variation of multiple
pricing where various products are bundled
together and sold as a one unit.
For e.g.: Fast Food Restaurants putting together
and offering products under a “Happy-price-
menu”
In this strategy, retailer sells one or few items on deep
“Discounted Prices” to increase traffic and sales
on complementary items.
The key to a successful leader pricing is that the
product must appeal to:
a)A large number of people
b)It should appear as a bargain
Items best suited for leader pricing are those
frequently purchased by shopper,e.g.bread,eggs,milk
etc.
In this pricing strategy, the retailers offer “Discounts”
to the customers who buy in quantity or who buy in
product bundle.
This involves value pricing for more than one or the
same.

For e.g. One T-shirt being offered for 255.99 and two
T-shirts for 355.99.
Like maggie noodles: 4 individual packs is available for Rs 40
and a pack of 4 is available for Rs 36 giving a discount of Rs
4.
 It is the strategy adopted by the retailers who
continually price their products lower than other
retailers in the area.

The objective is to assure the buyers that they need

not wait for sale or promotion to achieve the attractive
prices across the range of products they want to buy.

For e.g. EASY DAY AND BIG BAZAAR uses such

strategy to promote their products.
Retail prices are set in such a manner that
the prices end in odd numbers.

For e.g. such as 99.99 or Rs.199,Rs.299 etc.

This strategy is used to denote a lower sale

price.
In this strategy, retailer charges the same price for the
same product under similar circumstances.

This policy is also referred to as one-price policy.

For e.g. The “DOLLAR SHOPS” which charges one

price for the variety of items sold.
Under this pricing strategy, the customer is given
a discount for making quantity or bulk purchases.

For e.g. A can of soft-drink may be priced as Rs.15

while a pack of three may be sold for Rs.40.