33:630:301 Lecture Notes - Lecture 13: Value-Based Pricing, Fixed Cost, Price Skimming
28 Dec 2019
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Document Summary
Customer value-based pricing: good value pricing = offering the right combination of quality and good service at a fair price, value added pricing = attach value-added features and services to differentiate their offers and support higher prices. Cost-based pricing: cost-plus pricing (markup pricing, add a standard mark up to the total cost of the product, simple method. Ignores customer demand: break-even pricing (target return pricing, setting price to break-even on the total costs of making and marketing a product, or setting prices to make a target return, helps determine min prices. Competition-based pricing = setting prices based on competitors" strategies, costs, prices and market offerings: no matter what pricing strategy is selected, all companies should consider how competitors are pricing their market offerings. Demand curve = shows the number of units the market will buy in a given time period, at different prices that might be charged. Price elasticity = measures the sensitivity of demand to changes in price.
