Your Retail Price is the dollar price you direct distributors to sell your products to customers. Retail Price is usually a key determinant of Consumer Demand and is critical to maximizing your Sales Revenue and Profit.<\/p>\n
The most common pricing strategies are as follows:<\/p>\n
Economic Value Pricing focuses on the cost\u2013benefit determination by Customer of purchasing and using the Product over a period of time.<\/p>\n
An example would be purchasing an electronic vehicle, where the purchase price may be higher but the ongoing operating and maintenance costs may be substantially lower.<\/p>\n
Customer Value Pricing focuses on the perceived benefits a customer believes they will receive from purchasing a Product against not purchasing.<\/p>\n
An example would be the purchase of a new luxury car versus saving the difference.<\/p>\n
Market-Based Pricing prices a Product at the price the market will bear.<\/p>\n
This can be seen with monopolies, duopolies, and oligopolies where there are few sellers and many buyers.<\/p>\n
Examples would be Banks, Oil and Pharmaceutical Companies.<\/p>\n
Cost Plus and Target Pricing are related and based on an organization seeking a predetermined return (gross profit margin).<\/p>\n
Target Price generally based on industry research and an organization knowing its cost of producing and selling a product (i.e. \u201cTarget Cost\u201d) and then adding a desired gross margin<\/a>.<\/p>\n Cost Plus and Target Pricing widely used in automotive and electronic industries in Japan.<\/p>\n Price Skimming Pricing involves inflating prices to increase gross margins and profit.<\/p>\n Usually imposed during Launch and Growth Phases of a New Product in the product life-cycle where competition is limited<\/p>\n Price leader organizations generally have a product or technological edge (e.g. new patent, idea) and pursue Price Skimming until competitors catch up.<\/p>\n Penetration Pricing involves setting artificially low prices to gain a foothold in a Market to create demand and a based for a New Product or to sell a related Product<\/p>\n Examples are large department stores like Walmart who advertise a sale item at a loss price knowing that once customers come into the store they will buy more.<\/p>\nPrice Skimming Pricing<\/b><\/h3>\n
Penetration Pricing<\/h3>\n