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Unformatted text preview: Price – Variable cost) Breakeven point in dollars Total fixed cost / (1 – (Variable cost / Price) ) PRICING STRATEGIES
• Cost-based pricing measures cost of producing a
product including materials, labor, and overhead.
• Target Costing -- Making the final price of a
product an input in the product development process
by estimating the selling price consumers will pay. • Competition-Based Pricing -- A strategy based
on what the competition is charging for its products. Pricing Alternatives
• Skimming Price Strategy -- Pricing new products
high to recover costs and make high profits while
competition is limited. • Penetration Price Strategy -- Pricing products low
with the hope of attracting more buyers and
discouraging other companies from competing in the
market. • Everyday Low Pricing (EDLP) -- Setting prices
lower than competitors with no special sales. Pricing Strategies of Retailers
• High-Low Pricing -- Using regular prices that are
higher than EDLP except during special sales when they
are lower. • Psychological Pricing -- Pricing products at price
points that make a product seem less expensive than it
is. Take Aways
Do not wait for customers to come to you, make
it possible for them to buy your product;
Never, never, ever price at cost plus!!!!!!
Never, never, ever confuse promotion with
merely advertising!!!!!!! Heck, never, never, ever confuse marketing with
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This document was uploaded on 03/18/2014 for the course AEM 1200 at Cornell University (Engineering School).
- Spring '06