Question

Write in detail about different pricing theories that can be used by any firm?

Answer 1

Pricing is a very important managerial decision. There are different pricing strategies which can be used by firms.

 

Skimming pricing

It is a short term policy. In this high prices are charged in the initial stages. The producers identify their consumers on the basis of their intensity of desire for a commodity. For example, in the beginning the prices of T.Vs, computers and electronic gadgets were very high but now they are declining. If the situation is suitable a new product can be launched with heavy promotional expenditure at a high initial price.

Penetration pricing

This policy involves charging the lowest price for a new product. Its goal is to increase sales, utilize the full capacity and economies of scale in the productive process, capture market share and keep the competitors away.

Answer 2

Skimming Pricing:

Skimming pricing is known as charging a high price in introductory stages. This can be trailed by a firm by charging skimming price for another item in the pio­neering stage.

Penetration Pricing:

Penetration pricing is known as charging the most reduced price for the new item. This is gone for brisk in deals, capture market of the overall industry.

Product Line Pricing:

Product offering pricing is an essentially pragmatic issue for most present-day mechanical endeavors.

Pricing over the Life Cycle of a Product:

The cycle starts with the creation of the new item. The development of another item and its degeneration to a typical item is named as the life cycle of an item. It is an essential idea marketing that gives bits of knowledge to an item's competitive dynamics.

Cyclical Pricing:

Cyclical pricing alludes to the valuing choices of the firm which are taken to suit the vacillations in the business conditions.

Transfer Pricing:

Transfer pricing is a standout amongst the most complex issues in pricing.

Differential Pricing:

Differential pricing is a technique that is utilized by a few vendors to tailor their costs to the particular circumstance of buyers.