abhishreshthaa
Abhijeet S
Price
What is pricing?
The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.
Historically, price has been the major factor affecting buyer choice. However in recent decades, non price factors have become more important in buyer-choice behaviour.
GENERAL PRICING APPROACHES
1. Cost based pricing
2. Value based pricing
3. Demand based pricing
4. Skimming the cream pricing
5. Penetration pricing
WHAT IS COST BASED PRICING?
Cost based pricing is the simplest pricing method where a standard mark up to the cost of the product is added.
Mark up price = Unit cost_________
Desired returns on sales)
Since our objective of promoting “Quench It” is to serve our nation so we have used Cost based pricing method. This will give maximum benefits to the consumers at minimum price. We want majority of the smokers to consume our product and benefit from it. Since our target market i.e. smokers of India have maximum number of people in lower class, middle class and working class whose entire income goes in fulfilling their necessities will not be able to spend more on our product. So low pricing is one of our strategies to capture maximum market.
We will definitely include some % of profit which is required for effective operation of our company. And we also have niche market available so even this pricing will benefit us in long run. Below is tabular representation of how we have derived our price:
What is pricing?
The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.
Historically, price has been the major factor affecting buyer choice. However in recent decades, non price factors have become more important in buyer-choice behaviour.
GENERAL PRICING APPROACHES
1. Cost based pricing
2. Value based pricing
3. Demand based pricing
4. Skimming the cream pricing
5. Penetration pricing
WHAT IS COST BASED PRICING?
Cost based pricing is the simplest pricing method where a standard mark up to the cost of the product is added.
Mark up price = Unit cost_________
Desired returns on sales)
Since our objective of promoting “Quench It” is to serve our nation so we have used Cost based pricing method. This will give maximum benefits to the consumers at minimum price. We want majority of the smokers to consume our product and benefit from it. Since our target market i.e. smokers of India have maximum number of people in lower class, middle class and working class whose entire income goes in fulfilling their necessities will not be able to spend more on our product. So low pricing is one of our strategies to capture maximum market.
We will definitely include some % of profit which is required for effective operation of our company. And we also have niche market available so even this pricing will benefit us in long run. Below is tabular representation of how we have derived our price: