Pricing Products / Services

Jeremae Caballero
Pricing Products / Services

 One of the most important elements of the marketing mix,

which generates a turnover for the organization
 Factors:
 Fixed and Variable Costs
 Competition
 Company Objectives
 Target Group
Pricing Products / Services

 Types:
 Penetration Pricing – low price to increase sales and market. Once
stable, may then consider setting the price higher.

 Skimming Pricing – initially high price and then slowly lowers to

make product available to a wider market. The objective is to
skim profits of the market layer by layer

 Competition Pricing – setting a price in comparison with

competitors
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Pricing Products / Services

 Types:
 Product Line Pricing – pricing different products within the same
product range at different price points

 Bundle Pricing – the organization bundles a group of product at a

reduced price

 Psychological Pricing – 5.99 instead of 6.00

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Pricing Products / Services

 Types:
 Premium Pricing – the price is set high to indicate that the product
is “exclusive”.

 Optional Pricing – sells optional extras along with the product to

maximize its turnover
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Pricing Products / Services

 Types:
 Cost based Pricing – production cost + mark up

 Cost plus Pricing – Production cost + Mark up (based on how much

profit the company wants to make)

 Value based pricing – considers the value of the product to

consumers rather than the how much it cost to produce it. Usually
basing on the benefits it provides to the customers
Pricing Products / Services

 Things to remember:
 What is the value of the product or service to the buyer?
 Is the customer price sensitive? Will a small decrease in price gain
 
you extra market share or will a small increase be indiscernible,
and gain you more profit?
 What discounts should be offered to trade customers or to other
specific segments (consumer group) of your market?
 How will your price compare with your competitors
 QTY ITEM UNIT COST EXTENDED COST
3 Eggs 6/pc 18
1 cup Milk 27 / 370ml 18.24
1 cup White sugar 55 / kg 13.2
½t Vanilla 35 / 30ml 2.9
2 Tbsp Brown Sugar 48 / kg 1.44
45mins Cooking time 220 / 14 days 3.92
5.23/hr
2 pcs Packaging 5.50 / pc 11
Total Cost     68.77

40 % mark up     27.51
      96.28
10 % Buffer     9.62
Final Selling price (2 servings)   105.9
Per serving     52.95
 QTY ITEM UNIT COST EXTENDED COST

1 tsp Alcohol 72/500ml 0.72

2 tsp Massage oil 120 / 250ml 4.8

1 hr Service 512/8hrs 64

Total Cost     69.52

40% Mark up     27.81

      97.33

10 % Buffer     9.73

Final Selling Price     107.66