Pricing

Strategy Pricing Models

Q2_LAS2_W4
Learning Objectives

At the end of the lesson, you should be able to:

• Identify the different pricing strategies;
• Compute for the final price using the pricing
models; and
• Realize the value of setting the price of goods
and services that is most appropriate for the
business.
 Pricing
Strategies
Sample Pricing

• Value-based pricing
• Posting PHP 9.95 instead of PHP 10.00
• Value pack pricing
• Cost-plus pricing
• High price approach
• Penetration market pricing
• Sampling approach
• Result pay scheme
Before you do the final pricing…

you have to know the value of the total revenues (TR)

and the total costs (TC).
When TR is greater than TC, your business gained
profit. If the TR is lesser than TC, it is loss. In
instances that the TR and TC are equal, there is
neither profit nor loss. It is called break-even.
Before you do the final pricing…
 Percentage Allocation Approach

This is good for product type of business.

Decide for the percentage value to be added to the actual

cost of your product or service.
 Percentage Allocation Approach

Assuming that you sell t-shirts with unit cost of

PHP55.00. You aim to establish a 40% mark-up on your
products.
A. How much would be the unit price?
 Percentage Allocation Approach

Considering your customers with bulk orders, you establish the

following mark-up:
1 to 5 dozens = 38%
6 to 10 dozens = 35%
11 to 15 dozens = 32%
16 dozens & above = 30%
B. How much is the volume price if a customer buys 12 dozens?
 Average Mark-up Approach

This is appropriate for service- type of business.

Mark-up consists of damaged merchandise, employee

discounts, markdowns, operating expenses, and shortages.
 Average Mark-up Approach

a. Assume that you are operating a laundry service business

b. Decide for 60% profit against actual cost of every laundry
service, where 20% intends to support and finance some
operating expenses like damaged merchandise, employee
discounts, markdowns, operating expenses, profits and
shortages.
c. Consider a 40% mark-up to be added to the cost of the service
SHORT QUIZ #4