home Audience 5 The importance of pricing in marketing. Pricing methods. Pricing methods - tips, examples, calculations

The importance of pricing in marketing. Pricing methods. Pricing methods - tips, examples, calculations

Selecting a pricing method.

Knowing the demand schedule, the amount of costs and prices of competitors, an enterprise can choose its own pricing strategy, which can be based on costs, demand and competition.

1. Cost-oriented strategy. The marketer determines prices by adding a certain percentage of profit to the calculated amount of costs. Demand is not studied.

2. Demand-based strategy. The marketer determines prices after studying the desires of the consumer and sets them at a level acceptable to the given target market. In this case, price is seen as a key factor in the purchasing decision. The price depends on the elasticity of demand.

3. Strategy based on competition. This type of pricing is used by firms that face competitors producing similar products. The price level depends on the quality and image of the product, service, and the expected differences between the products.

All 3 strategies must be considered in relation to each other. Having chosen a pricing strategy, we move on to choosing a pricing method. There are 5 pricing methods.

1. The average cost plus profit method.

2. Break-even analysis method and target profit assignment.

3. Setting prices based on the value of the product.

4. Setting prices based on current price levels.

5. Pricing is based on closed bidding.

Let's consider these methods in detail.

1. The “average costs plus profit” method involves adding a certain markup to the cost of production. This is an internal pricing method. Its advantages:

· Producers know more about their own costs than about demand. Prices do not have to be adjusted depending on fluctuations in demand.

· If all firms in the industry use this method, prices for similar products will be similar, that is, price competition is minimized.

· This technique is considered fair to both buyers and sellers, since when demand is high, sellers do not profit at the expense of buyers and at the same time receive a fair rate of return on their invested capital.

However, any pricing methodology that does not take into account changes in current demand and competition will not allow reaching the optimal price.

2. The break-even analysis method and the assignment of target profits is based on the construction of a break-even graph, which presents total costs and expected total revenues at various levels of sales volumes.

This method does not take into account the size of current demand. This method requires the firm to consider various price options and sales volumes necessary to overcome the break-even level and achieve the target profit.

3. Setting prices based on the value of the product - the main pricing factor is not costs, but consumer perception. To form an idea of the value of a product, non-price influence methods are used. The price is designed to correspond to the perceived value of the product.

4. Setting prices based on the current price level - the company is based on the prices of competitors and pays less attention to costs and demand. This method is quite popular because, in cases where the elasticity of demand is difficult to measure, firms feel that the current price level represents the collective wisdom of the industry and ensures a fair rate of profit.

5. Pricing based on sealed bidding is used when a firm competes for contracts during bidding. In this case, the company is based on the expected prices of competitors, and not on the relationship between price and indicators of costs and demand. The company wants to receive a contract, and for this it is necessary to request a price lower than others. However, this price should not be lower than cost.

Marketing Pricing Methods

Topic 6. Price marketing

It is extremely important to digitalize the strategic price level (high-low) at which the product will enter the market. The choice of method for calculating the initial level of the selling price is carried out taking into account the listed factors and traditions of industry pricing. Practical pricing is based not on optimization methods, but on a gradual search for a more or less acceptable price using incomplete information. The seller must determine and justify the price that he wants and can offer to the market. This price must fall within the range beyond which production becomes unprofitable. The basic principles of pricing follow from the “magic triangle”: the price must cover costs and bring sufficient profit, must be accepted by the mass of buyers, and withstand the strategies of competitors. It is difficult to include these conditions in one price; therefore, when initially determining the price, it is extremely important to choose a priority direction: cost-effective, consumer or competitive. In accordance with this, there are methods focused on costs, demand, competitors, as well as methods derived from them (they can also be called synthetic, ᴛ.ᴇ. combining different directions).

1. Cost-based pricing methods:

o calculation based on full costs

o calculation based on variable costs

o pricing based on achieving target profit

o ROI method

2. Demand driven methods:

o determination of price based on a survey of a representative sample of consumers

o auction method

o experimental method (trial sales)

o parametric method

3. Competitor-focused methods:

o method of monitoring competitive prices

o competition method

4. Production pricing methods (mix):

o aggregate method

o reverse costing

o cost clearing

Cost-based methods: price is calculated as the sum of costs and mark-up on cost (progressive costing). As a rule, a company's product portfolio consists of several elements, which raises the problem of allocating fixed costs between products. There are various schemes for setting the selling price for each product.

1) Calculation based on full costs (Full Cost Pricing, Target Pricing): the amount corresponding to the rate of profit (N) is added to the full amount of costs. The surcharge includes indirect taxes and customs duties.

C = Full costs + N * Full costs

The method has calculation options: fixed costs are distributed in proportion to the identified variable costs of each product; production and sales costs (Cost Plus Pricing), processing costs (Conversion Cost Pricing), etc. In the first case, the formula is used:

The method does not take into account the different positions of products on the market, ignores the elasticity of demand, and reduces incentives to minimize costs. Expensive products become even more expensive, and a decrease in sales leads to higher prices and further worsens the competitiveness of the product. Some of the shortcomings are eliminated by calculating the cost for the average volume of output (not the most efficient), taking into account costs by type and place of origin and assigning them to a group of products, etc.

2) Calculation based on variable costs - fixed costs are divided according to the possibility of attribution to the product (the price covers the costs of producing the product, and the difference between them is a contribution to covering the remaining costs:

C = (variable costs + coverage) / output volume.

The amount of coverage (marginal income, added value) is determined by subtracting the amount of direct variable costs from revenue, part of the resulting amount goes to cover fixed costs, the remainder is profit.

3) Pricing based on ensuring the target profit determines the required price level for a given amount of profit, taking into account the possible volume of production, the relationship between costs and revenue. Different price options are considered, their impact on the sales volume necessary to overcome the break-even level and obtain the target profit (testing prices for profitability).

C = (total costs + planned profit) / output volume

Such calculations are carried out for various output volumes, and the best ratio is selected. The main disadvantage: the production volume depends on the price, it is incorrect to use it to calculate it.

4) Return on Investment Pricing method.

C = total costs / output + amount of interest on the loan

The method is based on the fact that the project must ensure profitability not lower than the cost of borrowed funds. This method is used by enterprises with a wide range of products, each of which requires its own variable costs.

The cost method is used to determine the lower threshold of possible price, which is extremely important for making decisions about stopping production or accepting additional orders. For example, for a company with partial load, orders are acceptable at a price that covers at least some part of fixed costs.

Demand-oriented methods: pricing takes into account the market situation (Pricing based on Market Consideration) and consumer preferences and is based on consumer surveys, expert assessments, and experiment.

1) Consumer survey method: a representative sample of consumers is carried out for a survey in order to identify the idea of the “right” price and the ceiling of the possible price, reaction to price changes, and the possibility of their differentiation. This process can be simulated. Let’s assume that the dependencies identified during the survey have the form:

p=b-bx, z=c+cx,

where: x - demand, p - price, z - costs,

then D=px=bx-bx (D is income).

The monopolist will receive maximum income when marginal revenue equals marginal cost:

=> x = (b-c) / 2b

By substituting demand values into the equations, we obtain the value of the optimal price and the corresponding costs, income, and profit.

Based on the identified dependencies, another method of calculating the value of the optimal price is also used: Ropt = direct costs * E / (1+E), where E / (1+E) is the markup on direct costs, Ropt is maximum as |E| to 1, which corresponds to the presence of a strong preference for the brand.

2) Auction method

It is used when setting prices for unique, prestigious goods, allows you to concentrate demand in one place, include an element of excitement in the price, the costs of holding an auction and the profit of the organizers.

Method options are determined by the type of auction (public auction):

a. “increase” pricing method (products are sold at the highest price offered by buyers);

b. “downward” pricing method (“Dutch system” or weiling bidding: the initial bid price is the highest);

c. the “sealed envelope” method, with no possibility of comparison with the requests of other buyers.

3) Experimental method (trial sales)

The price is set by searching through different price options based on observing consumer reactions, for example, to small changes in set prices and optimizing the revenue-sales volume combination. The application of the method is preceded by the determination of acceptable price limits.

4) The parametric method is based on a comparison of expert scores given to the main parameters of a new (A) and basic (B) product (or several competing products). The new price must be in the same ratio with the price of the base product as the quality.

It is known: expert assessments of the basic properties of the goods being surveyed (for example, on a 10-point scale) and assessments of the importance of these properties (for convenience, 1.0 is distributed among all attributes). For each product, an overall score, ᴛ.ᴇ, is determined. the sum of the scores weighted by their importance (property scores are multiplied by the importance scores and summed).

b. price of one point * total product score A = searched price

Competitor-oriented methods: used in a highly competitive environment and in cases where pricing based on other methods has failed: the price is changed to the price of competitors or the industry average. Prices are generally aimed at increasing the competitiveness of the product.

1) Method of monitoring competitive prices - the price is set and then kept at the price level of the main competitor.

2) Competition method. Competition (forced price competition among sellers) is characterized by concentration of supply and visibility of the market. Conditions: homogeneity of the product, the possibility of its clear description. The most common variant of this method is the tender method: buyers anonymously participate in a competition for proposals (tender), the winner is the one whose price provides the seller with the greatest profit. Used, for example, when placing government orders.

In closed bidding (the “sealed envelope” method), the competitors are not aware of the competitors’ proposals; in negotiated bidding, the remaining two participants who offered the lowest price negotiate among themselves.

The goal for the competition participant is to determine the maximum own price, which is lower than the prices of competitors, which comes down to assessing the probability of receiving an order at different prices. In practice, they are satisfied with assessing the likelihood of competitors setting a particular price based on comparison with previous competitions or intuitively.

Derivative methods (mix, synthetic)

1) The aggregate method determines the price of a product consisting of individual parts (for example, a chandelier) or finished products (a furniture set) as the sum of the prices of these components. If several products have a common unit (for example, a mixer - coffee grinder), then the price can be determined as the sum of the price of this unit and surcharges for the presence of individual elements.

2) Reverse costing: the selling price minus the discount (the profit required by the company) equals costs. Serves to control the actual or planned price from the standpoint of cost allowance.

3) Calculation equalization is applied if the price covering costs is not accepted by the market or, conversely, the demand price does not cover costs. The importance of each product in the program is not the same, and therefore high income from some often compensates for the low results of others. A forced reduction in prices for some products in the company's product portfolio will not allow achieving the desired profit with the planned volume of output. For this purpose, the company raises the price of the “hot” product.

For goods not accepted by the market:

a. Planned sales * Real price = Realized revenue

b. Realized revenue - Planned revenue = Undercoverage

For the “hot” product:

a. Planned revenue + Shortfall on “non-selling” goods = Required revenue

b. Required revenue: Planned output = Selling price

Variants of this method:

· assortment alignment is used within the framework of the strategy - “differentiation of prices of interrelated goods”;

· equalization over time in terms of consumer benefits is used as part of discriminatory strategies.

Marketing Pricing Methods

Topic 6. Price marketing

The strategic price level (high-low) at which the product will enter the market must be given a digital form. The choice of method for calculating the initial level of the selling price is carried out taking into account the listed factors and traditions of industry pricing. Practical pricing is based not on optimization methods, but on a gradual search for a more or less acceptable price using incomplete information. The seller must determine and justify the price that he wants and can offer to the market. This price must fall within the range beyond which production becomes unprofitable. The basic principles of pricing follow from the “magic triangle”: the price must cover costs and bring sufficient profit, must be accepted by the mass of buyers, and withstand the strategies of competitors. It is difficult to include these conditions in one price, therefore, when initially determining the price, it is necessary to choose a priority direction: costly, consumer or competitive. In accordance with this, there are methods focused on costs, demand, competitors, as well as methods derived from them (they can also be called synthetic, i.e. combining different directions).

1. Cost-based pricing methods:

o calculation based on full costs

o calculation based on variable costs

o pricing based on achieving target profit

o ROI method

2. Demand driven methods:

o determining the price based on a survey of a representative sample of consumers

o auction method

o experimental method (trial sales)

o parametric method

3. Competitor-focused methods:

o method of monitoring competitive prices

o competition method

4. Production pricing methods (mix):

o aggregate method

o reverse costing

o cost clearing

C = Full costs + N * Full costs

C = (variable costs + coverage) / output volume.

C = (total costs + planned profit) / output volume

4) Return on Investment Pricing method.

C = total costs / output + amount of interest on the loan

The cost method is used to determine the lower threshold of the possible price necessary to make a decision to stop production or accept additional orders. For example, for a company with partial load, orders are acceptable at a price that covers at least some part of fixed costs.

p=b-bx, z=c+cx,

where: x - demand, p - price, z - costs,

then D=px=bx-bx (D is income).

The monopolist will receive maximum income when marginal revenue equals marginal cost:

=> x = (b-c) / 2b

By substituting demand values into the equations, we obtain the value of the optimal price and the corresponding costs, income, and profit.

2) Auction method

It is used when setting prices for unique, prestigious goods, allows you to concentrate demand in one place, include in the price an element of excitement, the costs of holding an auction and the profit of the organizers.

Method options are determined by the type of auction (public auction):

a. “increase” pricing method (products are sold at the highest price offered by buyers);

b. “downward” pricing method (“Dutch system” or weiling bidding: the initial bid price is the highest);

c. the “sealed envelope” method, with no possibility of comparison with the requests of other buyers.

3) Experimental method (trial sales)

It is known: expert assessments of the main properties of the goods being surveyed (for example, on a 10-point scale) and assessments of the importance of these properties (for convenience, 1.0 is distributed among all attributes). For each product, an overall score is determined, i.e. the sum of the scores weighted by their importance (property scores are multiplied by the importance scores and summed).

b. price of one point * total product score A = searched price

1) Method of monitoring competitive prices - the price is set and then kept at the price level of the main competitor.

The goal for the competition participant is to determine the maximum own price, which is less than the prices of competitors, which comes down to assessing the probability of receiving an order at various prices. In practice, they are satisfied with assessing the likelihood of competitors setting a particular price based on comparison with previous competitions or intuitively.

Derivative methods (mix, synthetic)

2) Reverse costing: the selling price minus the discount (the profit required by the company) equals costs. Serves to control the actual or planned price from the standpoint of cost allowance.

3) Calculation equalization is applied if the price covering costs is not accepted by the market or, conversely, the demand price does not cover costs. The importance of each product in the program is not equal, so high returns from some often compensate for poor results from others. A forced reduction in prices for some products in the company's product portfolio will not allow achieving the desired profit with the planned volume of output. For this purpose, the company raises the price of the “hot” product.

For goods not accepted by the market:

a. Planned sales * Real price = Realized revenue

b. Realized revenue - Planned revenue = Undercoverage

For the “hot” product:

a. Planned revenue + Shortfall on “non-selling” goods = Required revenue

b. Required revenue: Planned output = Selling price

Variants of this method:

· assortment alignment is used within the framework of the strategy - “differentiation of prices of interrelated goods”;

· equalization over time in terms of consumer benefits is used as part of discriminatory strategies.

Pricing is an integral and important part of marketing activities. There are many pricing methods, the application of which requires knowledge not only in the field of accounting and finance, but also in the field of psychology.

Pricing policy (the content of the pricing policy is shown schematically in Fig. 7) primarily depends on the type of market in which the company operates.

rice. 7. Contents of the pricing policy.

The entire pricing policy of the company is built on the basis of set goals, which are determined by decisions made in the field of selecting target markets and positioning of goods. When setting prices, one should take into account the fact that prices are inversely related to demand, i.e. the higher the price, the lower the demand and vice versa. When estimating the demand for products, it is also necessary to take into account its elasticity.

The price is based on the costs associated with the production of goods, since the price must at least cover them if other goals are not met. Analysis of all costs involves determining fixed and variable costs. Thus, if demand determines the maximum price level, then costs determine its minimum level.

In the process of setting prices, adjustments are made by analyzing competitors' prices and products. The company's objectives, therefore, boil down to ensuring the successful sale of its goods by establishing additional sales incentives in prices compared to competitors. But at the same time you need to stay within the limits outlined by demand and your own costs.

Existing pricing methods are based on taking into account the cost of production, or the prices of competitors and the prices of substitute goods. The most common pricing methods include: average cost plus profit; based on break-even analysis and ensuring target profit; based on the perceived value of the product; based on current price levels; based on closed bidding.

After the events, the company sets the limits within which the price of the product should be. At the last stage of pricing, the final price is set taking into account a number of factors, among which psychological factors and the possible reaction of market participants should be highlighted.

Discriminatory pricing- selling goods at two or more different prices, regardless of costs.

This strategy is possible when the government pursues a general discriminatory policy towards the country in which the buying company operates, establishing high import or export duties, establishing a mandatory rule for using the services of a local intermediary, etc. Companies often adjust their base prices to accommodate differences between customers, products, points of sale, etc. In discriminatory pricing (price discrimination), a company offers a product or service (although a service is a specific form of product) at two or more different prices that do not reflect differences in costs.

The Robinson-Patman Act, passed in 1936 to protect small retail stores from unfair price competition by large chain retailers, prohibits manufacturers and wholesalers from engaging in price discrimination in their relationships with different buyers in a distribution channel for products of “like quality” if it causes damage to competition. This act covers prices, discounts, premiums, coupon guarantees, delivery, storage and credit terms. The terms of sale must be available to all competing marketers on a proportionately equal basis.

Price discrimination takes many forms.

Taking into account buyer groups: Different groups of customers pay different prices for the same product or service. For example, museums often sell tickets cheaper to students and older people.

Taking into account product options: different modifications of the product are sold at different prices that do not correspond to costs. Let's say a company sells a 1.5 liter bottle of mineral water. for $2. The same water, but bottled in 0.05 liter bottles. as a moisturizing spray, costs $6.

Taking into account the image: Some companies sell the same product at two different prices depending on the difference in image. Thus, a perfume manufacturer offers perfume at a price of $15 per 50 g. He can bottle the same perfume in more sophisticated bottles with a different name and image and charge a price of $45 per 50 g.

Based on location: A product is sold at different prices in different places, although the costs associated with supplying it are the same in both cases. The theater may vary the price of tickets in different parts of the auditorium depending on which seats are more popular.

Given the time: Prices vary depending on the season, day of the week and even time of day. Utilities vary their rates for commercial customers based on the time of day, and weekday and weekend rates also vary. You will pay more for a long-distance call on weekdays than for a call of the same length on weekends. A special form of time-based pricing is revenue-based pricing, which is often used by hotels and airlines to ensure maximum occupancy. For example, in order to ensure that a cruise ship is fully loaded, ticket prices are reduced 2 days before departure.

Setting prices within the product range. Typically, a company develops not a single product, but a product line. For example, Reebok offers four athletic shoe options. The series starts with the simplest model at a price of $60, and each subsequent offer has additional advantages, allowing you to assign a price premium for each new product introduced. The most expensive model retails for $135. With a certain price step between subsequent models, it is necessary to take into account differences in the cost of shoes, consumer assessments of various product features, as well as the prices of competitors. If the price difference between two successive models in a line is small, consumers will be more likely to purchase the more complex product. If this price is significant, buyers will opt for a simple model.

Pricing for additional devices. The car buyer has the opportunity to order electric windows, devices to prevent glass from fogging, and switch the headlights. However, pricing these devices becomes quite a challenge, as the car company must decide what to include as standard and what to price as optional equipment. For many years, the pricing strategy of American automakers was to advertise a stripped-down model priced at $10,000 in order to attract the public to car showrooms, where they mostly showed equipped models priced at $13,000. and higher.

Today, with the advent of the true value strategy, American automakers have borrowed from the Japanese automakers and included some of the most popular value-added benefits in the list price. Companies such as General Motors and Ford offer vehicles with air conditioning, heavy-duty window and door locks, and a rear window defroster, advertising them at a minimal (usually non-negotiable) delivery price.

Pricing for accessories. Some products require the use of auxiliary, or non-independent, accessories: razor blades (razors are useless without them) or photographic film. Manufacturers of basic goods often charge low prices for their products and charge significant markups for must-have accessories.

Setting a price with two components. Service companies often set prices that include two components - some fixed and some variable. Thus, a person using the services of a telephone company pays a monthly fee plus a fee for telephone calls beyond certain limits. These companies face the same problem as when pricing accessories.

The flat fee should be low enough to incentivize the purchase of the service, with additional services generating the bulk of the profit.

Setting prices for production by-products. Meat processing, production of petroleum products and other toxic chemicals are often associated with the emergence of various types of by-products. Any income generated from the sale of by-products gives the company the ability to charge lower prices for the main product if competition forces it.

Setting the price for the kit. Sellers often bundle their products by setting a single price for a set of items. Thus, a car manufacturer can offer a complete set of additional equipment at a lower price than it would cost to purchase all types of equipment separately. Some buyers do not want to purchase the entire set.

Let's say a medical equipment supplier offers free shipping and training as part of the package. One of the customers asks the seller to set a separate price for each component of the proposed set. The manufacturer has the opportunity to increase its profits if it meets the wishes of the client. So, if a supplier saves $100 on shipping and training costs and reduces the price to the customer by $80, he will make the customer happy, and the manufacturer's profit will increase by $20.

Pricing within the product range provides for: - setting prices within the product range;

Setting prices for complementary goods and mandatory accessories;

Setting prices for production by-products.

Competitive pricing strategy associated with the implementation of an aggressive pricing policy by competing firms - with their reduction of prices. It assumes for this company the possibility of carrying out two types of pricing strategy in order to strengthen its monopoly position in the market and expand its market share, as well as in order to maintain the profit margin on sales. In the first case, the seller also carries out a price attack on its competitors and reduces the price to the same or even lower level, trying not to lose, but, on the contrary, to increase its market share. Reducing prices has an effect on markets and its segments that are characterized by high elasticity of demand.

The basis for reducing prices is to reduce production and distribution costs. This strategy is also used effectively for those markets whose share is extremely dangerous to lose. In the second case, the selling company does not change prices, despite the fact that competing firms have reduced prices, as a result of which the rate of profit from sales for it remains the same, but there is a gradual loss of market share. This pricing strategy is used in markets with low elasticity of demand, where competing firms are small and it is difficult for them to allocate capital investments to expand production, when this selling company has confidence that it is able to restore lost positions in the market due to its high prestige among buyers .

Let's consider the company's possible response:

Save price. A company can maintain its price and profit margin if it believes that reducing its price will lead to an undesirable reduction in profits; stable prices will have a slight negative impact on market share. The negative consequences of maintaining prices include the following: the attacker gains confidence in his actions, the sales staff becomes demoralized, and the company loses a large share of the market.

Maintaining price and increasing added value. The company improves its product, improves the quality of service, and increases advertising costs. It may turn out that it is much more profitable to maintain prices and use profits to improve perceived quality than to reduce prices and settle for “crumbs” of profit.

Reduce prices. A company may follow a competitor if costs are reduced along with a decrease in production volume, there may be a significant reduction in market share (consumers are very price sensitive), and restoration of market share will be associated with enormous costs. But lower prices will reduce profits, at least in the short term.

Increase prices and improve quality. To distance itself from an attacking brand, a company may raise the price of its products and create new brands.

Organize a competitive line based on lower prices. It may be advisable to start producing cheaper goods or create a new inexpensive brand. For example, the Baltika company offered a cheap brand of beer “Svetloye”.

Incentive pricing- temporary reduction of price below the list price, sometimes below cost, in order to activate sales in a short period of time. They are carried out to attract buyers, as well as to reduce inventories that have markups. Companies use several methods of price promotion for the sale of goods. International companies must ensure that their promotional methods comply with the laws of the specific country in which they are used.

Setting the price for the “loss leader”: supermarkets and department stores are reducing the price of popular brands to stimulate additional influx of customers. But manufacturers discourage the use of their brand as a “loss leader” because the practice tarnishes their reputation and also attracts complaints from other retailers who charge list price for the product.

Pricing for special occasions: At certain times, sellers may set special prices to attract more buyers. So, in January, lingerie sales are held in order to attract people who are tired of New Year's shopping to the stores.

Discounts when paying in cash: To encourage purchasing during certain periods, manufacturers may offer customers a cash discount that allows manufacturers to sell inventory without changing list prices.

Low interest financing: instead of reducing prices for its products, the company offers the customer low-interest loans. Car manufacturers advertise 3% credit and sometimes 0% credit to attract customers.

Extension of payment terms: Mortgage banks and car companies extend loans for a longer period and thus reduce monthly payments.

Warranties and service contracts: The company promotes sales by offering free warranty repairs or a service contract (usually at reduced prices).

Assigning discounts that have a psychological impact: this method consists of setting an artificially high price and offering significant discounts from it; for example: it was $359, now it is $259.

This strategy aimed at promoting a product often turns into a zero-sum game. If it works, competitors quickly pick it up and the effectiveness of the strategy decreases. If such a strategy fails, the company is simply throwing away money that it could have used to improve product quality, service, and/or advertising.

Geographic pricing involves setting different prices for consumers in different parts of the country. First of all, delivering goods to a customer located at a great distance from the supplier is more expensive. This point is especially important when the customer does not have enough hard currency to pay for the purchase. In many such cases, buyers tend to offer other products as payment; this practice led to an increase in countertrade. Many Western companies are unfamiliar with forms of countertrade and prefer to make export payments in convertible currencies. However, countertrading is increasingly being used as part of a marketing strategy in Asia, the Middle East and other regions of the world where a tradition of sophisticated bargaining has become part of the business culture.

Barter- this is the direct exchange of some goods for others without the use of money as a medium of exchange and without the participation of a third party.

Compensation trading. In this case, the seller receives some of the payment in cash and the rest in products.

Buy-back agreements. The company exports plant, equipment, technology and receives products produced using this equipment as partial payment.

Pass. The seller receives payment in money, but agrees to use a significant portion of it within the buyer's country for an agreed period of time. For example, Pepsi-Cola partially sold Cola concentrate to Russia for rubles and purchased Russian vodka for a certain percentage of the proceeds to sell it in the United States. More complex types of countertrade involve more than two participants.

When organized geographically, sales agents can live within the territories they serve, get to know their clients better, and work effectively with minimal travel time and expense.

The strategic price level at which the product will enter the market must be given digital form. The choice of method for calculating the initial level of the selling price is carried out taking into account the listed factors and traditions of marketing pricing. As noted, practical pricing is not based on optimization methods, but on a gradual search for a more or less acceptable price using incomplete information. The seller must determine and justify the price that he wants and can offer to the market. This price must fall within the interval beyond which production becomes unprofitable (break-even point).

The basic principles of pricing follow from the “magic triangle”: the price must cover costs and bring sufficient profit, must be accepted by the mass of buyers, and withstand the strategies of competitors.

Taking into account the factors that directly influence the price level and knowing the goals of pricing, you can begin to establish the so-called base price.

The base price refers to the price of a unit of goods at the place of its production or resale.

There are two approaches to setting the base price:

Free pricing;

Use of list prices.

In the first case, the price is set as a result of negotiations between the seller and the buyer. This approach usually takes place when determining the price of goods manufactured to order or in separate small batches.

For mass-produced goods, the base price is indicated in price lists, catalogs and prospectuses offered to potential buyers or published in relevant publications. It may also be indicated on the tag attached to the product.

Price lists are used in commercial activities in the markets for various types of equipment, rental of ferrous metals, household electrical and electronic equipment, automobiles, as well as in consumer goods markets. The price indicated in the price lists may be adjusted for some customers through the use of various premiums and discounts added to the base price.

When determining the base price, both the manufacturer of the product and the wholesaler or retailer face the problem of establishing a price acceptable to the seller and satisfactory to the buyer, i.e. the price must be reasonable.

When justifying the price, the following factors are primarily taken into account.

The company must economically ensure its existence, i.e. the sale of existing goods must cover the costs associated with the activities of the company (short-term or long-term);

Buyers of goods and services have a specific need, limited by purchasing power, and cannot always pay the price desired by the seller;

There are competing products on the market and you need to take into account their quality and prices.

The amount of costs, consumer behavior and the behavior of competitors are decisive in justifying the price of goods, which is reflected in existing pricing methods. At the same time, in many of the methods used, preference is given to one of the above factors. It is difficult to include all these conditions in one price, therefore, when initially determining the price, it is necessary to choose a priority direction: costly, consumer or competitive.

Let us highlight the main methods of pricing in marketing into groups:

1. Cost-based pricing methods

Costing based on full costs;

Costing based on variable costs;

Pricing based on ensuring target profit;

Return on Investment Method.

2. Demand-driven methods

Determining the price based on a survey of a representative sample of consumers;

Auction method;

Experimental method (trial sales);

Parametric method.

3. Competitor-focused methods

Method for monitoring competitive prices;

Competition method.

4. Derivative (synthetic) pricing methods

Aggregate method;

Reverse costing;

Calculation clearing.

When using cost methods, the price is calculated as the sum of costs and markup on cost (progressive costing). As a rule, a company's product portfolio consists of several elements, which raises the problem of allocating fixed costs between products.

There are various schemes for setting the selling price for each product.

1. Calculation based on full costs (Full Cost Pricing, Target Pricing) - the amount corresponding to the rate of profit (N) is added to the full amount of costs. The surcharge includes indirect taxes and customs duties.

C = Full costs + N * Full costs (2),

This method has calculation options: fixed costs are distributed in proportion to the identified variable costs of each product; production and sales costs (Cost Plus Pricing), processing costs (Conversion Cost Pricing) and others.

2. Calculation based on variable costs - fixed costs are divided according to the possibility of attribution to the product (the price covers the costs of producing the product, and the difference between them is a contribution to covering the remaining costs:

C = (variable costs + coverage) / output (3)

3. Pricing based on ensuring the target profit determines the required price level for a given amount of profit, taking into account the possible volume of production, the relationship between costs and revenue. Different price options are considered, their impact on the sales volume necessary to overcome the break-even level and obtain the target profit (testing prices for profitability).

C = (total costs + planned profit) / output volume (4)

Such calculations are carried out for various output volumes and the best ratio is selected. Their main drawback is that production volume depends on price; it is incorrect to use it to calculate it.

4. Return on Investment Pricing method.

C = total costs / output + amount of interest on the loan (5)

1. Consumer survey method: a representative sample of consumers is carried out for a survey in order to identify the idea of the correct price and the ceiling of the possible price, reaction to price changes, and the possibility of their differentiation. This process can be simulated. Let’s assume that the dependencies identified during the survey have the form:

p=b-bx z=c+cx, (6)

where x is demand, p is price, z is costs,

then: D=px=bx-bx (D - income) (7)

The monopolist will receive maximum income when marginal revenue equals marginal cost:

=> x=(b-c)/2b (8_

By substituting demand values into the equations, we obtain the value of the optimal price and the corresponding costs, income, and profit.

Based on the identified dependencies, another method of calculating the optimal price value is also used:

C = direct costs * E/(1+E), (9)

where E/(1+E) is the markup on direct costs; the price is maximum as |E| to 1, which corresponds to the presence of a strong preference for the brand.

2. Auction method.

Method options are determined by the type of auction (public auction):

a) the upward pricing method (the product is sold at the highest price offered by buyers);

b) downward pricing method (Dutch system or weiling bidding: the initial bid price is the highest);

c) the sealed envelope method, with no possibility of comparison with the requests of other buyers.

3. Experimental method (trial sales)

4. The parametric method is based on a comparison of expert scores given to the main parameters of a new (A) and basic (B) product (or several competing products). The new price must be in the same ratio with the price of the base product as the quality. [ibid.]

Let's look at an example. It is known that expert assessments of the main properties of the goods being surveyed (for example, on a 10-point scale) and assessments of the importance of these properties (for convenience, 1.0 is distributed among all attributes). For each product, an overall score is determined, i.e. the sum of the scores weighted by their importance (property scores are multiplied by the importance scores and summed).

Figure 9 - Options for calculating prices using the parametric method

Competitor-oriented methods are used in a highly competitive environment and if pricing based on other methods has failed: the price is changed to the price of competitors or the industry average. Prices are generally aimed at increasing the competitiveness of the product.

1. Method of monitoring competitive prices - the price is set and then kept at the price level of the main competitor.

2. Competition method. Competition, i.e. forced price competition among sellers, characterized by concentration of supply and visibility of the market. Conditions: homogeneity of the product, the possibility of its clear description.

The most common variant of this method is the tender method, where buyers anonymously participate in a competition for proposals (tender) and the winner is the one whose price provides the seller with the greatest profit. This option is used, for example, when placing government orders.

In closed bidding (sealed envelope method), the competitors are not aware of the competitors' proposals; in negotiated bidding, the remaining two participants who offered the lowest price negotiate among themselves.

Derivative methods (mix, synthetic).

1. The aggregate method determines the price of a product consisting of individual parts (for example, a chandelier) or finished products (a furniture set) as the sum of the prices of these components. If several products have a common unit (for example, a mixer - coffee grinder), then the price can be determined as the sum of the price of this unit and surcharges for the presence of individual elements.

2. Reverse costing: the selling price minus the discount (the profit required by the company) equals costs. Serves to control the actual or planned price from the standpoint of cost allowance.

3. Calculation equalization is applied if the price covering costs is not accepted by the market or, conversely, the demand price does not cover costs. The importance of each product in the program is not equal, so high returns from some often compensate for poor results from others. A forced reduction in prices for some products in the company's product portfolio will not allow achieving the desired profit with the planned volume of output. For this purpose, the company raises the price of a popular product.

Existing pricing methods belonging to different groups should not be considered as alternatives. Moreover, justification of prices in real conditions predetermines in most cases the need to simultaneously analyze the price level taking into account costs, existing demand, existing competition, and then clarify it taking into account the influence of all these factors.

Wherein:

Cost analysis allows you to set a lower price limit;

Analysis of the relationship between supply and demand makes it possible to identify the upper price limit;

Analyzing the prices of competitors' products allows you to more accurately approach the real price of the product.