PRICING

PRICING DECISIONS

American Marketing Association defines price as “the formal ratio that indicates the quantities of money goods or services needed to acquire a given quantity of goods or services.” In other words, pricing is the process of determining what a company will receive in exchange for its goods and services. Sellers must carefully price their products as much of the business is dependent on the price decided for a particular product.

Price of any product or service is determined by several factors like-

• Manufacturing cost 
• Market conditions 
• Target demographics 
• Competitors’ prices 
• Producer’s perception about the quality of his own product

Generally, prices are set higher than the cost of manufacture of goods so as to earn a minimum amount of profit.

Pricing is of three types-

a. Reference Pricing- Consumer knows the possible price range of the product, may be from a past experience of buying or prior knowledge about the price of the product. Before buying, consumers employ reference pricing and check the actual price of the price and then buys it.

b. Price Cues- In this, seller price the product at a number ending in '9'. This is a highly psychological pricing. Like, a price Rs. 99 gives consumers that price is in the range of 90 while if it is 100 then it gives the feeling that product is priced in 3 digit numbers and it is expensive.

c. Price- Quality inferences- Many consumers thinks that price is the indicator of quality. Higher the price, higher is the quality. Some brands may adopt the policy of exclusivity and scarcity, signifying their uniqueness and charge premium rates.

BRU Pricing