TOM MODULE 6

Expensive & Cheap

Price

Pricing

Pricing

Sales

Revenue

Fixed cost

Profit margin

Variable costs

Breakeven point

Costs Organizational and Marketing objectives Other Marketing Mix Variable Buyer perceptions of Value of Price Competition Government Regulation and Taxes Nature of the Market and Demand Pricing in Different Market Price Elasticity of Demand Other Environmental Factors

Cost-based pricing, Break-even analysis and target profit pricing, buyer-based pricing (value based), competition- based pricing

Is an approach that aims to cover costs and make a profit

The fixed and variable costs are computed and a mark-up is added.

When price is determined using break-even price and projecting a target profit

Perceived-value pricing uses the buyer’s perceptions of value and not the seller’s cost as the key to pricing

What price competitors are putting on their products and services. Companies base their price mainly against the price pegged by their main competitors.

Prestige pricing, Market Skimming Pricing, Market penetration pricing, Product bundling pricing, volume discount, discounts based on time of purchase, discriminatory pricing, psychological pricing, promotional pricing

Used when the product or services is positioned to be luxurious and elegant.

Consumers become price insensitive when demand is high and supply is low.

Used when setting a low initial selling price to penetrate the market quickly and to attract many buyers for a large market share.

Used to attract buyers to purchase because of the reduced rate of the bundle compared to the total cost of the items if purchased individually.

rates given to frequent or high volume users to attract them to purchase the products.

Addresses the seasonality aspect of the tourism product.

The company sells a product or service at two or more prices, although the difference in price is not based on difference on cost but tries to maximize the amount that each customer pays.

Like prestige, reference prices, round figures and ignoring end figures are used in pricing. This strategy plays on the psychology of the consumer.

Offers discount and short-term incentives especially during the introductory stage of the product or during special activities such as anniversaries or festivals.