General Pricing Approaches Written Report
GENERAL PRICING APPROACHES
There are four general pricing approaches:
Mark-up pricing - The practice of adding a constant percentage to the cost price of an item to arrive at its selling price. Mark-up pricing is a pricing strategy in which the cost of the product is first calculated then a proportion of its markup was added. It is used primarily because it is easy to calculate and requires little information. An example of this are the retail stores.
Value-based pricing - also value optimized pricing is a pricing strategy which sets prices primarily, but not exclusively, on the value, perceived or estimated, to the customer rather than on the cost of the product or historical prices Value-based pricing is a strategy wherein the setting of a product or service’s price is based on the buyers’ perceptions of value independent of the cost. An example of this are the Louis Vuitton and Rolex products. We can notice that even though they are too expensive, many consumers still prefer to buy it because of its quality and because it satisfies the customers’ desires.
Value pricing - is offering the right combination of quality and good service at a fair price Value pricing is a way of deciding the price of a product based on what the customers think of its worth and on what they are willing to pay rather on what it costs to produce. The perfect example of this is the value meal menu. Value meal menu seems very attractive on the eye of the consumers because they perceive that upon buying the product, they will meet the satisfaction rate they needed.
Competition-based pricing - A pricing method in which a seller uses prices of competing products as a benchmark instead of considering own costs or the customer demand Competition-based pricing is all about setting the price following that of the industry leader. Although they were up to that strategy, they also have their own computations about the products they are selling. A good example of this are the Jollibee’s
There are four general pricing approaches:
Mark-up pricing - The practice of adding a constant percentage to the cost price of an item to arrive at its selling price. Mark-up pricing is a pricing strategy in which the cost of the product is first calculated then a proportion of its markup was added. It is used primarily because it is easy to calculate and requires little information. An example of this are the retail stores.
Value-based pricing - also value optimized pricing is a pricing strategy which sets prices primarily, but not exclusively, on the value, perceived or estimated, to the customer rather than on the cost of the product or historical prices Value-based pricing is a strategy wherein the setting of a product or service’s price is based on the buyers’ perceptions of value independent of the cost. An example of this are the Louis Vuitton and Rolex products. We can notice that even though they are too expensive, many consumers still prefer to buy it because of its quality and because it satisfies the customers’ desires.
Value pricing - is offering the right combination of quality and good service at a fair price Value pricing is a way of deciding the price of a product based on what the customers think of its worth and on what they are willing to pay rather on what it costs to produce. The perfect example of this is the value meal menu. Value meal menu seems very attractive on the eye of the consumers because they perceive that upon buying the product, they will meet the satisfaction rate they needed.
Competition-based pricing - A pricing method in which a seller uses prices of competing products as a benchmark instead of considering own costs or the customer demand Competition-based pricing is all about setting the price following that of the industry leader. Although they were up to that strategy, they also have their own computations about the products they are selling. A good example of this are the Jollibee’s