Customer Care - Pricing Methods 0.0 / 5 ? OtherAnimal ManagementOtherOther Created by: Becky_BerryCreated on: 03-03-21 13:32 Pricing Methods the right pricing method will help attract and retain consumers in the short & long term an important strategic decision for the business because of the internet and other methods consumers are more aware of prices every item has an RRP Recommended Retail Price: the price at which the manufacturer recommends the retailers sells the product e.g., London Zoo large pencil case/make-up bag £9.99 1 of 4 Cost-based Pricing: Cost Plus Pricing involves business working out the cost of producing one unit and then adding percentage for profit simple to use, and ensures profit sometimes called mark-up pricing covers the total production costs e.g., Zebra toy costs £3.45 to make, mark-up of 200% (£3.45x3 = £10.35) 2 of 4 Competition Pricing setting prices based on what rivals are charging 'going-rate' pricing setting a price that is in line with the prices charged by direct competitors Advantages: should be in line with rivals, so price should not be competitive disavantage Disadvantages: needs another way to attract customers. Has to use non-price methods to compete has to provide distinct customer service or better availability most firms do not have sufficient power to be able to set prices above their competitors such businesses are 'price-takers' - they must accept the going market price as determined by the forces of demand and supply 3 of 4 Pricing Methods Price Skimming: begin by charging a high price to recover their research & development costs over time price is gradually lowered to appeal to the mass market e.g., mobile phones Penetration Prices: involved introducing a new product at a lower price and increasing e.g., newly released products Psychological Pricing: using prices like £9.99 to try and convince consumers they're paying less and getting a bargain Price Discrimination: involves charging different prices to different groups of consmers for the same level of service Promotional Pricing: reduces the RRP to a lower price for a short amount of time may involve introductory offers or special offers/promotions Upselling: where you encourage a customer to buy a product with a better price mark up Add-ons: extra items you encourage the customer to buy to increase the amount of oney they are spending 4 of 4
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