PRICING TOPIC 1

Goes in order per year…

Barter: exchanging merchandise for merchandise

Currency: Lydia’s king Alyattes
Fixed pricing: setting one price for all buyers (consisting and predictable
pricing policy)
Dynamic pricing: changing the prices of products based on various factors)
demand, supply, competition, customer,etc)
 Price discrimination: seller prices the same product differently across
the markets based on what each market’s buyers are willing to pay
 Price optimization: analyzing customer and market data to find the most
optimal price point for a product or service

Price war: a period of fierce competition in which traders cut prices in an

attempt to increase their share of the market

Protection of Personal Data and Guarantee of Digital Rights conditions

personal pricing requiring the explicit agreement of consumers and
incentivizes new “transparent” or “privacy-focused” business models

Customer perceived value is constantly evolving

1st question: what is the value of my product?
2nd question: what the customer is willing to pay? The maximum price that the
customer is willing to pay for the product

“The fastest and most effective way for a company to realize its maximum
profit is to get its pricing right. Getting the price right is one of the most
fundamental and important management functions”

What is the price?

Monetary value
The sum of values that consumers exchange for the benefits of having or using
the product or service

What will affect?

 Influences the Quantity demanded

  Brand or product positioning
 How much revenue the company will earn

How much are you willing to pay for smth?

Types of price

 Selling price or final price

 Market price
 Reference price
 Threshold price
 Price at origin
 Recommended price (RRP)
 Round price formed by whole numbers
 Fractional price
 Wholesale price
 Retail price
 Political price
 Other

Pricing is the process whereby a business sets the price at which it will sell its
products and/or services

The key economic questions

A price system:

Is a Mechanism in economics by which goods,services and resources are

allocated amoung producers and consumers through a process of valuation

The vast numbers of economic agents within an economic system are guided
and directed by a price system to arrange exchange, production, and
consumption in an efficient and mutually beneficial way

Part 2
Perceive

The value that a product or service has for you

Is dynamic because is very individual
When we evaluate we think about a price that we paid before that is a
reference price.

The higher the perceived value the higher the price

The main thing is customers

Our economic purchases are self-base

The trade-off, we can only choose one thing.

When we compare one product to another and select one.

Adaptation level theory:

We are kind to act depending on our past experiences

The current price is influenced by the knowledge of the past price

No many brands use it

Its hard to make comparisons between different alternatives

Assimilation contrast theory:

Weber theory:
When a price changes we don’t pay attention to the amount change but is
relative to the original price, our sensitivity to price changes is relative to the
original price or service

Prospect theory:
Humans hate losing much more than they actually
love gaining.
The amount of joy comes from receiving
 Check the video for more detail

Economic value: the max price customers are willing to pay.

If you don’t use it you can underprice or overprice a product or service

We need to know what is customers' best alternative.

We need to know how to calculate this differentiation value, everything that
makes our product different, better, or more attractive

Incentive is made for push customers to buy and convince them about it

Calculate de economic value:

Need to know our component

Identify the monetary value ( translate psico value to monetary value
somehow)

Exercise 1: PPT 2

Pricing elasticity

When the pricing is elastic, or have elastic, consumers are very sensitive to change. If you increase
your price people is going to notice.
When the pricing is inelastic
Less than 1 is inelastic, we can increase the prices
More than 1 is elastic

Income elasticity

Topic 4
What is the difference between cost and expenditure?

Cost is What we pay for resources to produce and expenditure is spending money for some
resources that are used for the operation of the company

What is economies of scale?

Economies of scope?

Economies of learning?
Throw our experience we learned to be more efficient and this experience helped us to low
cost (ask if its always like that)

Explicit and implicit cost both give us opportunity cost

Explicit is what your phone cost (money related)

Implicit is for example the (maybe is your wasted time) cost that is not related to money