StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

The Methods of Setting Prices - Essay Example

Cite this document
Summary
The paper "The Methods of Setting Prices" states the pricing practices and strategies in various businesses. Businesses and consumers have perfect knowledge of the marketplace but actually, they lack the perfect knowledge. This makes the establishment of a pricing policy necessary…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91% of users find it useful
The Methods of Setting Prices
Read Text Preview

Extract of sample "The Methods of Setting Prices"

?  Pricing Decisions Article is based on the study of pricing practices and policies by small business owners/managers in northeast Louisiana. Article 2 relates to examination of the success of pricing practices of a new product and the conditions upon which contingency of success lies. Article 3 focuses on defining pricing strategies for specific corporate objectives. Article 4 aims at studying both usage-based and fixed pricing schemes in a competitive scenario where the company is incurring a transaction cost of monitoring usage on the implementation of usage-based pricing. Article 5 aims to find out the methods of setting prices which are dominating Slovenian business practice. Introduction The articles deal with the pricing practices and strategies in various businesses. As stated in article 1, the businesses and consumers have perfect knowledge of the marketplace but actually they lack the perfect knowledge. This makes the establishment of a pricing policy necessary. Article 2 is based on examining pricing for new product price decisions. It is basically the study of the three pricing practices with respect to competition, costs, and customer value. Article 3 states that products have been divided into four categories such as specialty, preference, convenience, and shopping. The research in this article is basically on the pricing strategy for the various product categories. The relevant strategy was selected as per the literature of the paper that is penetration and skimming strategy. Article 4 deals with the pricing of a short license for software service. Earlier, firms in this industry used to do the pricing based on the usage of resources. As computer hardware became fast and cheap the business model remained no more significant. With the recent spread of complex enterprise software, the cost of software maintenance and deployment has increased again. Therefore, the pricing scheme had been termed as subscription pricing. Article 5 states that pricing is not the most important but is just one of the elements of marketing mix. Inspite, managers complain quite often about the problems and pressures arising due to pricing of competitors, it is stated in the article that pricing is rarely a problem. It states that pricing should be such that the perceived value of the product or service should supersede the perceived price. Importance of the study Article 1 focuses on determining whether small firms use the same established economic principles that economists rely on while explaining the behavior of large firms with regards to pricing strategies and objectives. The study basically is conducted in order to determine whether the economic principles are appropriate for small businesses or not. Article 2 is significant because it deals with the aspects of new product pricing practices. The research paper assesses the ways pricing can be done for a new product. It is important from the perspective of a manager as its becoming difficult for managers to analyze the correct price for the value they are providing to their consumers. Article 3 deals with the aspects of pricing of various product categories which could help attain the corporate objectives of the firm. It is important because pricing should be done on the use of the product. The product category such as convenience products cannot be priced higher as because of the presence of many low cost producer firms in the industry. The research is ideal for serving as a starting point for a developing a framework of corporate objectives, pricing strategies, and product categories. Article 4 is important because it is related to software pricing. The pricing strategy the researchers are focusing on is basically usage-based pricing wherein the firms will be able to acquire low usage consumers as they do not have to pay more than they use. Article 5 is important as the research is on pricing based on cost or customer. Literature Review Paper 1 In the year 2011, Dunn et.al conducted a study on “Pricing practices in very small businesses”. The aim of the study is to ascertain whether small firms use established economic principles that economists rely on while explaining the behavior of large firms regarding pricing strategies and objectives. The methodology used is primary research through circulation of questionnaires. The conclusion could be drawn that very small businesses generally follow the basic principles of economic theory in northeastern Louisiana (Dunn et.al, 2011). Paper 2 In the year 2003, Ingenbleek et.al conducted a study on “Successful new product pricing practices: a contingency approach”. The aim of the study is to examine the success of pricing practices of new product and the conditions on the contingency of success. The methodology used is primary research by mailing to 590 marketing managers. The conclusion drawn from the study is that value-informed pricing leads to new product performance whereas cost-informed and competition-informed pricing have no vital effect (Ingenbleek et.al, 2003). Paper 3 In the year 2009, Kehagias et.al conducted a study on “Plaiting pricing into product categories and corporate objectives”. The aim of the study is to define pricing strategies for specific corporate objectives. The methodology used is primary research. The primary research was based on pilot/exploratory interviews. The conclusion drawn from the above study is that the frequency of use of pricing strategies differs along corporate objectives and product categories in few cases. The high-price strategy prevails in case of specialty products whereas the low-price strategy is used for preference and convenience products. When main corporate objectives are to increase market share the low-price strategy is used more often and vice-versa (Kehagias et.al, 2009). Paper 4 In the year 2010, Bala et.al conducted a study on “Usage-based pricing of software services under competition”. The aim of the study is to determine the transaction cost incurred by the firm in implementing usage-based pricing under competitive setting. The conclusion drawn from the findings is that the ‘usage-based pricing’ may not be a panacea for software service providers (Bala and Carr, 2010). Paper 5 In the year 2004, Korda et.al conducted a study on “Cost-driven or customer-driven pricing”. The aim of the study is to ascertain the methods of setting prices. The methodology used is primary research. The conclusion drawn from the study is that cost-driven is more commonly used than customer-driven pricing. Summary After studying Article 1 it was found that is based on the study of pricing practices and policies by small business owners/managers in northeast Louisiana. In a nutshell it may be said that on the basis of Article 1, the businesses and consumers have perfect knowledge of the marketplace but actually they lack the perfect knowledge. This makes the establishment of a pricing policy necessary. Article 2 relates to examination of the success of pricing practices of a new product and the conditions upon which contingency of success lies. Hence, it is based on examining pricing for new product price decisions. It is basically the study of the three pricing practices with respect to competition, costs, and customer value. Article 3 focuses on defining pricing strategies for specific corporate objectives. The methodology used in this article is primary research. The primary research was based on pilot/exploratory interviews. The basic findings of the study suggest that the high-price strategy prevails in case of specialty products whereas the low-price strategy is used for preference and convenience products. The aim of the study of Article 4 is to determine the transaction cost incurred by the firm by implementing usage-based pricing under competitive setting. It used both usage-based and fixed pricing schemes in a competitive scenario where the company is incurring a transaction cost of monitoring usage on the implementation of usage-based pricing. The aim of the study of Article 5 is to ascertain the methods of setting prices which was primarily done with the help of primary research. The conclusion drawn from the study is that cost-driven is more commonly used than customer-driven pricing. Article 5 is important as the research is on pricing based on cost or customer. Reference Korda, P and Sabina, B. (2004). Cost-driven or customer-driven. Zagreb: University of Zagreb. Bala, R and Scott, C. (2010). Usage-based pricing of software services under competition. Kehagias, J and et.al. (2009). Plaiting pricing into product categories and corporate objectives. Ingenbleek, P and et.al. (2003). Successful new product pricing practices: a contingency approach. Dunn, P and et.al. (2011). Pricing practices in very small businesses. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Pricing Decisions Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Pricing Decisions Essay Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/finance-accounting/1488851-pricing-decisions
(Pricing Decisions Essay Example | Topics and Well Written Essays - 1000 Words)
Pricing Decisions Essay Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/finance-accounting/1488851-pricing-decisions.
“Pricing Decisions Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/finance-accounting/1488851-pricing-decisions.
  • Cited: 1 times

CHECK THESE SAMPLES OF The Methods of Setting Prices

Skimming Strategy and Pricing Method

For this reason, the market prices must be higher than what other existing products cost (Smith 289).... On the other hand, I must consider how the consumers perceive higher prices and what their take on increased prices could be.... The bottom line in this consideration is that high prices can be set initially and well accepted, while it may not be easy to hike prices at a later date.... The quality of the product in this case being high would justify the high prices....
4 Pages (1000 words) Essay

Approaches to Standard Setting in Accounting

They also enable us to have consistency in the methods that are used to organize company's financial statements.... In the financial market securities are the free market stocks that are mostly traded and their prices are not affected by their availability/supply.... The essay "Approaches to Standard setting in Accounting" focuses on the critical analysis of the major issues in the main approaches to standard setting in accounting....
8 Pages (2000 words) Essay

Ff options can only be priced because they can be replicated, why do we need them

Dynamic replication assumes a constant movement of asset prices while the real prices of the assets can move non-constantly.... The pricing of an option depends on the ability of an individual to predict the future behavior of the asset prices.... Under option contracts, option writers are most of the times obligated to deliver some form of liability with regard to dynamic replication, which are valued by way of creating a diversified portfolio that is underlying and that exactly matches the residual costs involved in setting up both sides leading to a replicated product (Roman, 2004)....
4 Pages (1000 words) Assignment

New Assistive Technology for the Disabled Elderly

Innovation in the field comprises introducing new ideas, methods of treatment, drugs, and medical devices, keeping in view the overall people's health status and the different kinds of diseases that are also cropping up competitively with the technology improvement.... The paper "New Assistive Technology for the Disabled Elderly" states that the word 'Innovation' can be defined as – 'The introduction of new ideas, goods, services, and practices which are intended to be useful....
18 Pages (4500 words) Essay

Initial Public Offerings in Saudi Capital Market

This essay "Initial Public Offerings in Saudi Capital Market" sheds some light on the Saudi Stock Market that was witnessing remarkable growth due to factors like high oil prices which contributed to the surge in the Saudi Economy.... ??High oil prices, substantial liquidity and a surging economy as well as self driven confidence are factors that continue to maintain a bull market and rapid development of the Saudi bourse.... As at the beginning of the year 2005 the Saudi Stock Market was witnessing a remarkable growth due to factors like high oil prices which contributed to the surge in the Saudi Economy....
14 Pages (3500 words) Essay

Marketing : prices vs costs

prices are usually set with respect to the industry's prevalent criteria and this generally.... A firm would eventually lower its prices when it feels that the competitive activity has started to make its mark within the relevant industry and when the customers are The value of pricing wars is significant since economic recessions hit any market in a specific period of time and thus take the bulk of the customers away with it....
4 Pages (1000 words) Essay

Discussion Questions

Some of the methods of doing this include price reductions and the provisions of other incentives.... he essence of setting up any business is to benefit from accrued profits.... For instance, these may include high quality products, low prices, convenience among other attributes.... Taking pride in quality means that prices should not matter to the customers; no matter how high the goods and services are priced, they will still access the market....
2 Pages (500 words) Essay

Cost and Management Accounting

opic 2: setting prices for Service Organisations ... However, their application in setting prices for service organisations in a reliable manner is difficult as determination of the costs to be included in calculation of service price.... Due to such factors, application of target costing in setting prices for service organisations becomes difficult.... This gives rise to two consequences in setting prices by service organisations....
12 Pages (3000 words) Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us