Pricing objectives are goals that describe what a firm wants to achieve through pricing. Pricing objectives must be stated explicitly, and the statement should include the time frame for accomplishing them. There are six stages of setting prices. They are developing pricing objective, assessing the target market's evaluation of price, evaluating competitors' prices, choosing a basis for pricing, selecting a pricing strategy, and determining a specific price.
Cost-based pricing is adding a dollar amount or percentage to the cost of the product. Cost-plus pricing is adding a specified dollar amount or percentage to the seller's cost. Markup pricing is adding to the cost of the product a predetermined percentage of that cost. Demand-based pricing if pricing based on the level of demand for the product. Competition-based pricing is pricing influenced primarily by competitors' prices.
A pricing strategy is an approach of a course or action designed to achieve pricing and marketing objectives. Differential pricing is charging different prices to different buyers for the same quality and quantity of product. Negotiated pricing is establishing a final price through bargaining. Secondary-market pricing is setting one price for the primary target market and a different price for another market.
Periodic discounting is temporary reduction of prices on a patterned or systematic basis. Random discounting is temporary reduction of prices on an unsystematic basis. Price skimming is charging the highest possible price that buyers who most desire the product will pay. Penetration pricing is setting prices below those of competing brands to penetrate a market and gain a significant market share quickly. Product-line pricing is establishing and adjusting prices of multiple products within a product line.
Captive pricing is pricing the basic product in a product line low while pricing related items at a higher level. Premium pricing is pricing the highest-quality or most versatile products higher than other models in the product line. Bait pricing is pricing an item in the product line low with the intention of selling a higher-priced item in the line. Price lining is setting a limited number of prices for selected groups or lines of merchandise. Psychological pricing is pricing that attempts to influence a customer's perception of price to make a product's price more attractive. Reference pricing is pricing a product at a moderate level and positioning it next to a more expensive model or brand.
Bundle pricing is packaging together two or more complementary products and selling them for a single price. Multiple-unit pricing is packaging together two or more identical products and selling them for a single price. Everyday low prices is setting a low price for products on a consistent basis. Odd-even pricing is ending the price with certain numbers to influence buyers' perceptions of the price or product. Customary pricing if pricing on the basis of tradition. Prestige pricing is setting prices at an artificially high level to convey prestige or a quality image.
Professional pricing are fees set by people with great skill or experience in a particular field. Price leaders are products priced below the usual markup, near cost, or below cost. Special-event pricing is advertised sales or price cutting linked to a holiday, season, or event. Comparison discounting is setting a price at a specific level and comparing it with a higher price..