PRICING POLICIES AND STRATEGIES

Presented By

Prof. S P Das
M.Phil. (Economics), M.B.A. (Finance), M.A. (Economics), PGDM, PGDFM, DHMCT, MCCP, B.Com.

Considerations in Formulating Pricing Policy

Competitive Situation Goal of Profit and Sales Long Range Welfare of the firm Flexibility Government Policy Overall Goals of Business Price Sensitivity Routinisation of Pricing

Objectives of Pricing Policy

Price-Profit Satisfaction Sales Maximization and Growth Making Money Preventing Competition Market Share Survival Market Penetration Market Skimming Early Cash Recovery Satisfactory Rate of Return

Factors involved in Pricing Policy

Cost Data Demand Factor Consumer Psychology Competition Profit Government Policy

Pricing Practices

Cost Oriented Pricing Cost-Plus (or Full Cost Pricing) Marginal (Incremental) Cost Pricing Target (or rate of return) Pricing Progamme Pricing Competition Oriented Pricing Going Rate Pricing Loss Leaders Trade Association Pricing Customary Pricing Price Leadership Cyclical Pricing Imitative Pricing and Suggested Pricing Turnover Pricing Price based on other Economic Considerations Administered Pricing Dual Pricing Price Discrimination or Differential Pricing

Price Discrimination

Time Price differentials

Clock time (Peak Load) Calendar time (Season)

Use Price Differentials Quality Price Differentials Quantity Price Differentials

Cumulative Discounts Quantity Discounts Functional (Distributors) Discount

Geographic Price Differentials Personal Price Differentials National Areas Price Differentials

Pricing Strategies

Stay Out Pricing Price Lining Odd Number and Round Number Pricing Limit Pricing Skimming Pricing Penetration Pricing Premium Pricing Put out Pricing PLC Pricing

Transfer Pricing Methods

Market Price Basis Cost Basis Cost Plus Basis

THANK YOU