Pricing Strategies of Itc free essay sample

Pricing Methods To set the specific price level that achieves their Pricing objectives, managers may make use of several Pricing methods. These methods include: †¢Cost-plus Pricing set the price at the production cost plus a certain profit margin. †¢Value-based Pricing base the price on the effective value to the customer relative to alternative products. †¢Psychological Pricing base the price on factors such as signals of product quality, popular price points, and what the consumer perceives to be fair. Price Discounts The normally quoted price to end users is known as the list price. This price usually is discounted for distribution channel members and some end users. There are several types of discounts, as outlined below. †¢Quantity discount offered to customers who purchase in large quantities. †¢Cumulative quantity discount a discount that increases as the cumulative quantity increases. Cumulative discounts may be offered to resellers who purchase large quantities over time but who do not wish to place large individual orders. We will write a custom essay sample on Pricing Strategies of Itc or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page †¢Seasonal discount based on the time that the purchase is made and designed to reduce seasonal variation in sales. For example, the travel industry offers much lower off-season rates. Such discounts do not have to be based on time of the year; they also can be based on day of the week or time of the day, such as Pricing offered by long distance and wireless service providers. †¢Cash discount extended to customers who pay their bill before a specified date. †¢Trade discount a functional discount offered to channel members for performing their roles. For example, a trade discount may be offered to a small retailer who may not purchase in quantity but nonetheless performs the important retail function. Promotional discount a short-term discounted price offered to stimulate sales. Approaches to Pricing: Pricing as the most effective profit lever. Pricing can be approached at three levels. The industry, market, and transaction level. Pricing at the industry level focuses on the overall economics of the industry, including supplier price changes and customer demand changes. Pricing at the market level focuses on the competitive position of the price in comparison to the value differential of the product to that of comparative competing products.