Pricing strategies

Question 1

3 steps in Pricing strategies

Answer 1

1. Investigate the company
2. Investigate the product
3. Determine a pricing strategy

Question 2

Investigate the company (4)

Answer 2

1. How big is it?
2. What products does it have?
3. Is it leader in the field?
4. Is it in charge of its own pricing strategies?

Question 3

Investigate the product (4)

Answer 3

1. How does it compare with that of the competition?
2. Are there substitutions or alternatives?
3. Where is the product in its growth cycle?
4. Is there a supply-and-demand issue at work?

Question 4

Determine pricing strategy

Answer 4

1. Competitive analysis
2. Cost-based pricing
3. Price-based costing

Question 5

Competitive Analysis (7)

Answer 5

1. Are there similar products out there?
2. Hoe does our product compare with the competition?
3. Do we know competitors cost?
4. How are its products priced?
5. Are there substitutions available?
6. Is there a supply-and-demand issue?
7. What will the competitive response be?

Question 6

Cost-based pricing

Answer 6

1. Take all costs and add a profit to it

2. Risky due to misjudgements

Question 7

Price-based costing

Answer 7

1. What are people willing to pay for this product?

2. Compare to other products