Business Studies - Pricing methods

the ways businesses price their product or service.

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Cost Based Pricing (cost plus)

Work out the cost of making each item and then add on a % mark up to allow for a profit.

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compatition based pricing

price is based on a consideration of thier rivals.

look at what the competition charges and beat it to get more people to buy your product or service.

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market based

customer value pricing - charge what people think it is worth.

penetration pricing - start low to gain custom and then put price up later.

skimming - start high to get rich customers (or those deperate to buy) pay a higher price and then drop the price to get others to buy (only works for a new, unique products without direct competition.)

loss leader - low price to attract customers to buy other items.

price discrimination - different prices to different/groups of buyers (only really suitable for services)

discounts and sales

psycological pricing - 'fool' the customers e.g. £0.99

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