Pricing Strategies: Mastering the Art of Pricing, Strategies for Profit and Success

By Fouad Sabry

What is Pricing Strategies

When it comes to selling a product or service, a company has a number of different pricing techniques at its disposal. The top executives of a firm must first assess the company's price position, pricing segment, pricing capabilities, and competition pricing reaction strategy before they can choose which pricing strategy will be the most beneficial for the company. Pricing strategies and tactics varies not only from one company to the next, but also from one nation to another, from one culture to another, from one industry to another, and over the course of time, as a result of the maturation of industries and marketplaces as well as wider economic conditions.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Pricing strategies

Chapter 2: Monopoly

Chapter 3: Price discrimination

Chapter 4: Product bundling

Chapter 5: Pricing

Chapter 6: Product differentiation

Chapter 7: Porter's five forces analysis

Chapter 8: Price skimming

Chapter 9: Cost-plus pricing

Chapter 10: Porter's generic strategies

Chapter 11: Barriers to entry

Chapter 12: Yield management

Chapter 13: Non-price competition

Chapter 14: Rebate (marketing)

Chapter 15: Dynamic pricing

Chapter 16: Value-based pricing

Chapter 17: Marketing channel

Chapter 18: Premium pricing

Chapter 19: Pay what you want

Chapter 20: Customer cost

Chapter 21: Types of e-commerce

(II) Answering the public top questions about pricing strategies.

(III) Real world examples for the usage of pricing strategies in many fields.

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Pricing Strategies.

• Language: English
• Publisher: One Billion Knowledgeable
• Release date: Feb 4, 2024

Book preview

Chapter 1: Pricing strategies

When selling a product or service, a company may employ a number of pricing strategies. Senior executives must first identify a company's pricing position, pricing segment, pricing capability, and competitive pricing reaction strategy before determining the most effective pricing strategy.

Companies determine the price of their products based on their pricing strategies. The price can be determined to maximize profit per unit sold or from the market as a whole. It can also be used to defend an existing market against new entrants, increase market share within an existing market, or enter a new market. Pricing strategies can bring both competitive advantages and disadvantages to a company and frequently determine the success or failure of a business; therefore, it is essential to select the optimal pricing strategy.

Pricing method in which all costs are recovered. The price of the product comprises the variable cost of each item in addition to a proportional amount of fixed costs. The formula for calculating absorption pricing is ((Unit Variable Costs + (Overhead + Managing Costs))/Amount of units produced. By applying the Absorption Pricing Method, it is possible to calculate Fixed/Variable Costs, Direct/Indirect Costs, Employee Salary, Utility Costs, and other types of costs.

Contribution margin-based pricing maximizes the profit derived from an individual product based on the difference between the product's price and variable costs (the product's contribution margin per unit) and on assumptions regarding the product's price and the number of units that can be sold at that price. The contribution of a product to total firm profit (i.e., operating income) is maximized when its price maximizes the following::

(contribution margin per unit) × (number of units sold)

In cost-plus pricing, a company first determines the product's break-even price. This is accomplished by calculating all costs associated with production, including raw materials, transportation, marketing, and distribution. The company then determines a markup for each unit based on the profit it must earn, its sales goals, and the price it believes customers will pay. For instance, if the required profit margin is 15% and the break-even price is $2.59, the price will be set at $3.05 ($2.59 /