Price Setting Method: Basic Theory of Pricing

But, before reading further, you should look at previous pricing fundamental theory below:

1. Pricing in Marketing : http://marketingforbeginner.blogspot.com/2016/01/pricing-in-marketing.html
2. Pricing Objectives : http://marketingforbeginner.blogspot.com/2016/01/pricing-objectives-goal-of-pricing.html
3. Price Setting Factors : http://marketingforbeginner.blogspot.com/2016/01/price-setting-considerations.html
4. Things that affect pricing : http://marketingforbeginner.blogspot.com/2016/01/factors-that-affect-price-determination.html

Above are basic concept of pricing article. Let's continue on our main subject in this article.

The method of price setting

1. Cost Oriented Method
2. Competition Oriented Method
3. Demand Oriented Method
4. Customer Oriented Method

• Mark-up pricing
• Return on investment pricing
• Break Even pricing
• Variable cost pricing
• Peak-load pricing

• Above market pricing
• Below market pricing
• Loss leader pricing
• Sealed bid pricing

• Profit Maximization pricing
• Income Maximization pricing
• Unit Volume Maximization pricing

• Industrial engineering pricing
• Discriminative pricing
• Perceived value pricing

Pricing Strategy

1. Pricing strategy for new product
2. Pricing strategy for established product
3. Pricing strategy for competition based environment
4. Pricing strategy based on psychology 

• Skimming pricing
• Penetration pricing
• Initial pricing

Pricing strategy for established product consists of:

• Preserve a price
• Reduce a price
• Increase a price

Pricing strategy based on psychology consists of:

• Promotional pricing
• Customary pricing
• Prestige pricing
• Price lining
• Demand-backward pricing
• Bundle pricing

 Pricing strategy for competition based environment consists of:

• Price position against quality ( benchmark to competitor )

 These are strategy for determining a price. I will explain you detail one by one in the next article.

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