100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Costing and Pricing Decisions £2.99   Add to cart

Lecture notes

Costing and Pricing Decisions

1 review
 310 views  0 purchase

This lecture we will be focusing on pricing, costing being a part of it. We will be discussing major factors that affect the pricing decisions and long term and short term decision making. We will also be discussing the different pricing strategies.

Preview 1 out of 5  pages

  • March 2, 2016
  • 5
  • 2015/2016
  • Lecture notes
  • Unknown
  • 6
All documents for this subject (7)

1  review

review-writer-avatar

By: bhumi • 8 year ago

reply-writer-avatar

By: bnotes • 8 year ago

avatar-seller
bnotes
Lecture 6: Costing and Pricing Decisions
This lecture we will be focusing on pricing, costing being a part of it. We will be
discussing major factors that affect the pricing decisions and long term and short
term decision making. We will also be discussing the different pricing strategies.

• Pricing decisions are management decisions about what to charge for
the products and services that companies deliver. The strategy is to
either price low and sell more or price high and derive the profit from
mark-ups.

• To maximise operating profit, companies produce and sell units as long as
the revenue from an additional unit exceeds the cost of producing
it.

Major influences on the pricing decisions:

1. Market positioning:

• Companies position themselves in certain markets and this may
influence product prices. For example one company might target a
more elite market whereas the other would focus on a low price,
high volume market.

• A firm with a reputation for very high quality and prestigious
products may set a high price, consistent with that image because
you expect the demand to be low but you expect the people to pay
for it.

• An overemphasis on price cutting can damage a product’s image,
and reduce profitability

2. Product costs:

• In the long term, firms must produce at a cost below selling price
(Target Costing). Over the long term even the fixed costs should be
covered.

• The importance of product cost in price setting varies across
industry and even within firms.

• Even when a firm sets a price below cost, it is still important to have
an awareness of product cost for product mix decisions etc.

3. Customer value:

Look at a similar product line, its key targets, pricing, and resources. Looking at
the value customer actually gains and the price that they are willing to pay.

• The difference between the value that a customer gains by owning
and using a product, and the price paid for the product

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller bnotes. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £2.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

79271 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£2.99
  • (1)
  Add to cart