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Pricing Strategies

Some of the pricing strategies are:

(a)    Slimming Pricing:

The main objective is to take back the money invested as soon as possible with the price being higher than the cost of production. This strategy helps the firms to meet high selling and distribution expenses and in gaining profit before the competitors enter the market.

(b)     Penetration pricing:

This strategy is aimed at fixing price which is very low so that the product is accepted in the Market. This strategy discourages competitors form entering the market because of low price and low profit merging.

The most commonly used approaches are:

(a)    Cost plus Pricing:

This involves determine-nation of prices based on the total cost of production, selling and distribution. This method is most widely used by wholesalers and retailer. It is used to calculate the bidding price. A fire estimates its cost plus price and then adjusts it in accordance to the market and other factors. It can be used to estimate future costs.

(b)    Break Even Plus Demand Approach:

This pricing approach is a modified form of break even analysis. It takes into account production, selling cost and estimated demand.

(c)    Competition-oriented pricing approach:

This type of pricing is seen in ligopolistic market where there are few salvers selling identical products and the demand is inelastic. Completion oriented pricing is easy to decide and calculate.

(d)    Target Rate if retry Aortic:

This is one of ht frequently used method of pricing. Target rate of return may be fixed as a percentage of investment.

(e)    Marketing Approach:

Customer and the market are the two main aspects in marketing approach. It includes identification of prospective customer, demand estimation, prediction of comp share, determination of pricing stratify identification of alternative prices and decision of final price.

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