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B2B 6 +pricing

This document discusses pricing strategies for business-to-business (B2B) markets. It outlines objectives of pricing such as survival, profit maximization, and revenue maximization. Factors that influence industrial pricing decisions are also examined, including objectives, demand analysis, government policies, costs, and competition. Key differences between industrial and consumer pricing are pricing negotiation and evaluation based on value chain in B2B. Common pricing theories and methods used for B2B include cost-based approaches, competition-based methods, and penetration, skimming, value, loss leader, and psychological pricing.

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dhara
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109 views

B2B 6 +pricing

This document discusses pricing strategies for business-to-business (B2B) markets. It outlines objectives of pricing such as survival, profit maximization, and revenue maximization. Factors that influence industrial pricing decisions are also examined, including objectives, demand analysis, government policies, costs, and competition. Key differences between industrial and consumer pricing are pricing negotiation and evaluation based on value chain in B2B. Common pricing theories and methods used for B2B include cost-based approaches, competition-based methods, and penetration, skimming, value, loss leader, and psychological pricing.

Uploaded by

dhara
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Sixth Lecture

on
pricing

•Objectives of pricing

•Factors influencing pricing decision in industrial marketing

• Differentiating factors industrial & consumer pricing

•Pricing theories

•Cost and competition based methods used for B2B


Objectives of Pricing

SURVIVAL PROFIT REVENUE


MAXIMIZATION MAXIMIZATION
•Cover fixed costs •Costs hard to
and some variable •Requires accurate determine
costs knowledge of •Works if market is
•Avoid Extinction demand, cost price sensitive
functions •Increase in revenue
leads to decrease in
unit costs.

2
Factors influencing pricing decision

Pricing
Pricing
objectives:
objectives:
Survival
Survival
MaxMaxprofit
profit
leadership
leadership ,etc
,etc

Demand
Demand
Govt.
Govt. .policy
.policy Analysis:
Analysis:
regulation,
regulation, Price
Price
if any
if any vs.vs.
Pricing volume
volume
Pricing
decision
decision

Competitive
Competitive Cost
Costanalysis:
analysis:
analysis:
analysis: Cover
Cover allall
costs
costs
Competitive
Competitive &&
Level
Levelpricing
pricing Profit margins
Profit margins
Industrial vs. Consumer Pricing

Aspects Industrial pricing Consumer pricing

Pricing Negotiated price, bulk Listed price is final


discounts, delivery, subject to discount
installation, penalty, scheme, if any
training , etc are
considered
Evaluation Based on firm’s value Customer decision
chain and competitive
offerings
Buyers Professionals Individuals. Limited
Extract value for money choice

Bargaining Competitive bidding & Only through by haggling


negotiation
Pricing : Theories
Penetration Pricing :( Nano car)
Market Skimming
(Lap tops when introduced, telecom launches, etc)
Value Pricing
(Status products: luxury cars, fashion clothes, perfumes)
Loss Leader
Super market sales for stock clearance, buy one take one free, annual/
seasonal sales)
Psychological Pricing
( Discount sale unto 50%, Bata pricing, etc)
Marginal Cost Pricing
(more production to cover fixed costs)
Influence of Elasticity
Cost-Plus Pricing
B2B pricing methods most commonly used

Cost based methods:

1. Rate of return pricing (fixed percentage mark up over cost,


profit as a fixed % of sales, fixed return on investment, etc)

2. Cost plus or Mark up pricing( lawyers, consultants, builders,


accountants etc)

3. Marginal cost pricing( in competitive market scenario cover


cost by maximizing productivity and lower input costs.
However it does not provide stable pricing policy. In case of
recession this method may be used)
B2B pricing methods most commonly used

Competition Method

1. Competitive bidding & negotiating

2. Price leadership( big vs. small player collective wisdom to


exploit market)

3. Trade association prices( Base on the understanding of the


members/price cut by one member can spark off price war)
THANK YOU

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