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Cost-Based Pricing
Calculates total costs.
Adds a markup for profit.
Suitable for ensuring all costs are covered.
Competitive Pricing
Sets prices based on competitors.
Aims to match or undercut competition.
Requires continuous market analysis.
Skimming Pricing
Sets high prices for new, unique products.
Targets early adopters willing to pay more.
Prices lower over time as competition increases.
Penetration Pricing
Introduces low prices to gain market share.
Price increases once a customer base is secured.
Often used in highly competitive markets.
Perceived-Value Pricing
Prices based on customer perceptions.
Factors in brand, quality, and exclusivity.
Can demand higher prices if perceived value is high.
Demand-Based Pricing
Prices fluctuate with demand levels.
Often used in service industries like airlines.
Requires a flexible pricing model.
Auction-Type Pricing
Price determined by buyer bids.
Commonly used in B2B transactions.
Can maximize returns if demand is high.
Bundle Pricing
Combines several products at a combined price.
Often lower than the total cost of buying separately.
Can increase sales volume of slower-moving items.
Zone Pricing
Sets prices according to geographical zones.
May account for shipping and handling costs.
Can vary greatly depending on location.
Freight Absorption Pricing
Seller absorbs all or part of freight charges.
Attractive to distant buyers.
Useful for penetrating new markets.
Baseline Pricing
Establishes a fixed base price globally.
Adjustments made for local market conditions.
Helps maintain global brand consistency.
Currency Adjustment Factor (CAF)
Adjusts prices based on fluctuations in currency.
Protects sellers from losing money due to exchange rate changes.
Often used in international contracts.
Trade Discounts
Offered to channel members for performing certain functions.
Encourages retailers and distributors to stock and promote products.
Quantity Discounts
Price reduction for buying in bulk.
Encourages larger orders, enhancing economies of scale.
Seasonal Discounts
Price reduction for buying out of season.
Helps even out production cycles and sales patterns.
Cash Discounts
Offered for prompt payment of invoices.
Improves cash flow and reduces credit costs.
Odd Pricing
Sets prices just below round numbers (e.g., $19.99).
Can increase demand by making prices seem lower.
Prestige Pricing
Maintains high prices to signal quality and status.
Targets consumers who associate higher prices with higher value.
Reference Pricing
Shows a higher reference price compared to the sale price.
Creates a sense of value and savings for the customer.
Price Lining
Offering a product line with several items at specific price points.
Simplifies the decision-making process for customers.
Transfer Pricing
Sets prices for transactions between company subsidiaries.
Needs to comply with international tax laws and regulations.
Price Discrimination
Different prices for different customers or markets.
Must be legally justifiable and not based on unfair criteria.
Price Fixing
Illegal practice where businesses agree on prices of goods or services.
Avoid collusion with competitors to set prices.
Predatory Pricing
Setting extremely low prices to eliminate competition.
Can lead to legal issues if deemed to be anticompetitive.