Marketing Mix: Pricing

Price
 Price is that which is given up in an exchange to acquire a good or
service.

 To the consumer, it is the cost of something. To the seller, price is

revenue—the primary source of profits.

 Revenue is the price charged to customers multiplied by the number

of units sold.
 Price X Units = Revenue

 Revenue is what pays for every activity of the company: production,

finance, sales, distribution, and so on. What is left over is profit.
 Pricing Strategies
 Competitive Pricing: This pricing strategy focuses on the existing
market rate (or going rate) for a company’s product or service.

 Cost Plus Pricing: Also known as markup pricing. Cost of producing

goods or service + Markup sets the price.

 Dynamic Pricing: Also known as surge pricing/demand pricing/time-

based pricing. Dynamic price is set based on fluctuation in demand.

 Price Skimming: companies charge the highest possible price for a

new product and then lower the price over time as the product
becomes less popular.
 Pricing Strategies
 Price Penetration: This pricing strategy focuses on entering the
market with a very low price, which successfully detracts customers
from higher-priced competitors.

 Premium Pricing: Also known as luxury/prestige pricing. High price

of product communicate a high value, luxury or premium image.

 Bundle Pricing: When companies offer two or more complementary

products or services and sell them for a single price, this is known as
bundle pricing.

 Psychological Pricing: Price is set to target the human psychology to

increase the sales.