Meaning of Pricing

• Pricing is a process of fixing the value that a

manufacturer will receive in the exchange of
services and goods. Pricing method is exercised to
adjust the cost of the producer’s offerings suitable to
both the manufacturer and the customer.

• The pricing depends on the company’s average

prices, and the buyer’s perceived value of an item, as
compared to the perceived value of competitors
product.
 Points to be considered while setting the
price
• The identity of the goods and services
• The cost of similar goods and services in the
market
• The target audience for whom the goods and
services are produces
• The total cost of production (raw material, labor
cost, machinery cost, transit, inventory cost etc).
• External elements like government rules and
regulations, policies, economy, etc.,
 Objectives of Pricing

• Survival
• Expansion of current profits
• Ruling the market
• A market for an innovative idea
 Types of Pricing Method

Cost Oriented Pricing Method

• Cost-Plus Pricing- In this pricing, the manufacturer calculates
the cost of production sustained and includes a fixed
percentage (also known as mark up) to obtain the selling
price. The mark up of profit is evaluated on the total cost
(fixed and variable cost).

• Markup Pricing- Here, the fixed number or a percentage of

the total cost of a product is added to the product’s end
price to get the selling price of a product.

• Target-Returning Pricing- The company or a firm fix the price

of the product to achieve the Rate of Return on Investment.
 Market-Oriented Pricing Method
• Perceived-Value Pricing- In this method, the producer establish the cost taking
into consideration the customer’s approach towards the goods and services,
including other elements such as product quality, advertisement, promotion,
distribution, etc. that impacts the customer’s point of view.
• Value pricing- Here, the company produces a product that is high in quality but
low in price.
• Going-Rate Pricing- In this method, the company reviews the competitor’s rate
as a foundation in deciding the rate of their product. Usually, the cost of the
product will be more or less the same as the competitors.
• Auction Type Pricing- With more usage of internet, this contemporary pricing
method is blooming day by day. Many online platforms like OLX, Quickr, eBay,
etc. use online sites to buy and sell the product to the customer.
• Differential Pricing- This method is applied when the pricing has to be different
for different groups or customers. Here, the pricing might differ according to the
region, area, product, time etc.
 3 Cs of pricing

• Customer

• Competition

• Cost
 Pricing Model
• Flat Rate Pricing
• Tiered Pricing
• Usage based Pricing
• Per user Pricing
 What is price positioning?

Price positioning is the act of setting a price on a

particular product/service that is within a specific
price range.

The price positioning shows where a product is

positioned as regards to its competitors in a
particular market as well as to the customer’s
perception.
 Role of Sales force in Pricing
• Identify the market trends like what is selling
most
• Know the competitors pricing
• Affordability and choices of customers
• Review of old accounts to keep a track of
accurate pricing
• Educate and train sales force with value based
pricing and negotiation
• Sales Analysis
 What is Online Auction?
• Online auctions are conducted over the internet, to
enable quicker and more profitable sales which are not
only advantageous but ease out on efforts and costs
involved.

• Unlike the traditional buying and selling, where sellers

decide the price and the buyers purchase something at
that pre-decided price, online auctions help the buyer
quote price for a property and it is at the option of the
seller to sell or not to sell the property at that price or
sell it to the highest bidder.
 Bid Pricing
• A bid price is a price for which somebody is
willing to buy something, whether it be a
security, asset, commodity, service, or
contract.
• It is colloquially known as a “bid” in many
markets and jurisdictions.
 Ethical Issues in Pricing
• Price fixing: Collusion at its worse: Price fixing
involves an agreement between a group of people on the
same side of a market to buy or sell a good or service at a
fixed price.

• Bid rigging: Favoritism: involves promising a commercial

contract to one group, even though you make it look like
multiple parties had the opportunity to submit a bid.

• Price discrimination: Anti-favoritism: Price

discrimination is the strategy of selling the same product at
different prices to different groups of consumers, usually
based on the maximum they are willing to pay
• Price skimming: Discriminating through time:
Price skimming is when the price for a product is first sold at
a very high price and then gradually lowered.

• Supra competitive pricing: Monopoly gouging

Sometimes the value that consumers place on a good is much
greater than the cost of producing that good.
 Personal Selling
• Personal Presentation by the firms’ sales force for the
purpose of making sale
and building customer relationship.
• Personal selling consists of interpersonal interactions
with customers and prospects to make sales and
maintain customer relationships.
 Process of Personal Selling
• Prospecting
• Pre-Approach
• Approach
• Presentation & Demonstration
• Overcoming Objection
• Closing
• Follow up
 Sales Force Management
• Sales Force Management (SFM) is a sub-system of
marketing management. It is Sales Management that
translates the marketing plan into marketing
performance.
 Sales force management Process

• Setting targets and objectives based on inputs

• Assigning executives for achieving sales
objectives
• Control processes are achieved within a given
time frame and given markets
• Management of system to handle uncertain
environment
Some of the metrics that are implemented
in the sales force management processes

• Time management- measures the tasks and time required for

each task
• Call management- planning for customer interactions
• Opportunity management- if the sales force management
process is correctly implemented, sales opportunity will be
created
• Account management- In case of multiple opportunities with
a customer, the account is to be measured by the tools,
processes and objectives
• Territory management- managing sales territories is of
utmost experience for managing sales figures
 Sales force selection
• Searching for prospective candidates
• Encouraging them to apply for the job
• Applications are collected from interested
candidates
• Available candidates are scrutinized through
different tests and interviews to find out most
suitable candidates
 Recruitment of salesmen involves the
following processes
• Deciding the quantity of sales force.
• Determination of the characteristics and qualities to
be possessed by the sales force.
• Tapping the various sources of recruitment.
• Careful selection of the candidates and finalizing the
employment.
 Training of Sales force
• Basic Principle of Salesmanship

They should be able to meet the objections raised by the

customers. The training programme should stress on the
AIDA formula to explain and build the sales presentation.
A – Attention – How to get it?
I – Interest – How to arouse it?
D – Desire – How to develop it?
A – Action – How to bring about decision to buy?
Sales force must have
• Knowledge of the Firm
• Knowledge of the Product
• Knowledge about the Customers
• Knowledge of Competitors
• Matters Pertaining to the Day to Day

Further, Sales force can be trained on below mentioned points

• To draft periodical reports to the firm
• Receipt of and replying letters
• Preparation of orders and bills
• Maintenance of accounts
• Arrangements of display and demonstration of products.
 Methods of Training
• Initial or Break-In Training
• Special Assignments
• Field Coaching
• Sales Manuals (These are tailored books where a number of
problems are stated together with suggested answers)
• Audio-Visual Methods
• Discussion and Case Method
• Role-Playing
 Control
• Observing, monitoring and reporting the performance of
the sales force,
• Counseling and coaching salespeople to remove the
defects and weaknesses in their performances.
• Giving them adequate information regarding company
plans and policies and changes in those policies.
• Receiving feedback and solving their business and
personal problems.
• Motivating the sales force through appropriate non-
financial incentives in order to satisfy their conceited
demands
 Evaluation
• ability to sell a satisfactory volume
• ability to sell at a profit
• ability to sell at a low cost
• ability to plan and organize time and efforts
• knowledge of products, policies, customers
and competition
• ability to attract and hold customers
• Reports and Records of the sales force