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HB 41 G / SEMESTER 5
PRICE
Price is the amount of money charged for a
product or service, or the sum of all the values
that customer gives in order to gain benefits of
having or using a product or service.
PRICING APPROACHES
GENERAL PRICING APPROACHES
Cost -Based Pricing: Cost-Plus Pricing
Value-Based Pricing:
Uses buyers perceptions of value rather than sellers
costs to set price.
Measuring perceived value can be difficult.
Consumer attitudes toward price and quality have
shifted during the last decade.
Value pricing at the retail level
Everyday low pricing (EDLP) vs. high-low pricing
PRICING STRATEGIES
Penetration Pricing
The price charged for products and services is set artificially
low in order to gain market share. Once this is achieved, the
price is increased.
Price Skimming
Charge high price because you have substantial competitive
advantage. However, the advantage is not sustainable. The
high price tends to attract new competitors into the market,
and the price inevitably falls due to increased supply.
Neutral Pricing
Neutral pricing involve setting prices at a moderate
level in relation to the economic value to most
potential consumer.
This strategy can be use by default, when a firm
cannot use skim pricing or penetration pricing
because of its cost structure or the market conditions.
PRICE CHANGE
A price change is the difference in the cost of an asset
or security from one period to another.
While it can be computed for any length of time, the
most commonly cited price change in the financial
media is the daily price change which is the change
in the price of a stock or security from the precious
trading days close to the current days close.