Price policy — an extremely important tool of a commodity producer, however, its use is fraught with risk, since if it is handled ineptly, the most unpredictable and negative results in terms of their economic consequences can be obtained. And it is absolutely unacceptable for the company to have no pricing policy as such.

In order to differentiate these factors in the process of determining the price-new policy, one should rely on clearly formulated main corporate and marketing goals for one or another sufficiently long period. In other words, when developing and implementing a pricing policy, one should be based on the company's strategic attitudes and the tasks they define. Figure 13.1 shows a relatively broad set of pricing objectives. Of course, it does not at all follow from it that a company, even a very large one, strives to achieve all the listed goals (the number of which, by the way, can be significantly expanded): firstly, simultaneous work to achieve them is ineffective due to the dispersal of forces and means; secondly, there are mutually exclusive goals - for example, obtaining the maximum profit during the period of large-scale development of new markets, requiring large expenditures of funds.

Figure 13.1 - Main objectives of the pricing policy

The nature of the goals and objectives of the company is reflected in the features of the pricing policy: the larger, more diverse and more difficult to achieve the company-wide goals, strategic goals and objectives in the field of marketing, the more difficult the goals and objectives of the pricing policy, which, in addition, depends on firm size, product differentiation policy, industry affiliation of firms.

We list several aspects of the formation of pricing policy:

· determination of the place of the price among other factors of market competition;

application of methods that help optimize settlement prices;

choice of leadership strategy or strategy following the leader when setting prices;

Determining the nature of the pricing policy for new products;

· formation of a pricing policy that takes into account the phases of the life cycle;

· the use of basic prices when working in different markets and segments;

· Accounting in the pricing policy of the results, comparative analysis of the ratios of "costs / profits" and "costs / quality" for your company and competing firms.

Pricing policy implies the need to establish a firm-my initial (base) price for their goods, which it reasonably varies when working with intermediaries and buyers.

The general scheme for determining such a price is as follows:

1) formulation of pricing objectives;

2) determination of demand;

3) cost estimation;

4) analysis of prices and products of competitors;

5) choice of pricing methods;

6) setting the base price.

Subsequently, when working in markets with different and changing conditions, a system of price modifications is developed.

Price modification system:

1. Geographic price modifications take into account the requirements of consumers of individual regions of the country, occupying large areas, or individual countries in whose markets the company operates.

In this case, five main geographic strategy options are used:

- strategy 1: manufacturer's selling price at the place of production (ex-works). Transportation costs are borne by the buyer (customer). The disadvantages and advantages of such a strategy for the seller and the buyer are obvious;

- strategy 2: single price. The manufacturer sets a single price for all consumers, regardless of their location. This price setting strategy is the opposite of the previous one. In this case, consumers located in the most remote territory win the price;

- strategy 3: zone prices. This price setting strategy is intermediate between the first two. The market is divided into zones, and consumers within each of the zones pay the same price. The disadvantage of the strategy is that in the territories located near the conditional boundaries of the division of zones, the prices for goods differ significantly;

- strategy 4: accrual to all buyers, regardless of the actual place of dispatch of the goods, of additional freight costs in addition to the selling price, accrued from the selected basis point to the buyer's location. In the process of implementing this strategy, the manufacturer may consider several cities as a base point (freight basis);

- strategy 5: payment of freight costs (their part) at the expense of the manufacturer. It is used as a method of competition to enter new markets or maintain its position in the market when competition intensifies. By fully or partially paying for the delivery of goods to the destination, the manufacturer creates additional advantages for himself and thereby strengthens his position in comparison with competitors.

2. Price modifications through a discount system in the form of cash discounts (discounts for cash or early payments), wholesale discounts (price reductions when buying a large consignment of goods), functional discounts (trade discounts provided to intermediary firms and agents included in sales network manufacturer), seasonal discounts (offer after- or pre-season discounts), other discounts (offset of the price of a similar old product handed over by the buyer; discounts on the occasion of a holiday, etc.).

3. Price modification for sales promotion is carried out in various forms: price-bait (sharp temporary price reduction in retail for well-known brands) prices set for the time of special events (valid only during certain events or when using special forms of offering goods - seasonal or other sales); bonuses (cash payments end customer who bought the goods in retail trade and presented the coupon to the manufacturer); favorable interest rates when selling on credit (a form of sales promotion without price reduction; widely used in the automotive industry); warranty conditions and maintenance contracts (may be included in the price by the manufacturer; services are provided free of charge or on preferential terms); psychological modification of prices (the possibility of offering one's own similar product at a lower price, for example, the price tag may indicate: “Price reduction from 500 thousand to 400 thousand rubles”).

4. Price discrimination occurs when a manufacturer offers the same products at different prices. The main forms of discrimination, which are often an integral part of pricing policy, are: price modification depending on the segment of consumers (the same product is offered different categories consumers at different prices). modification of prices depending on the forms of the product and differences in its application (with small differences in the forms of manufacture and use, the price can be significantly differentiated, and at constant production costs); modification of prices depending on the image of the company and its specific product; differentiation of prices depending on the location (for example, the sale of the same product in the city center, on its outskirts, in the countryside); modification of prices depending on the time (for example, telephone tariffs may depend on the time of day and days of the week).

However, price discrimination is justified under the following conditions: its compliance with laws, invisibility of its implementation, a clear division of the market into segments, the exclusion or reduction to a minimum of the possibility of resale of "discriminated" goods, not exceeding the costs of segmenting and controlling the market of additional revenues from price discrimination .

The pricing policy of the manufacturer, presented in a condensed form, reflects mainly world practice. However, as market relations develop in Russia, domestic producers begin to develop and use a well-thought-out pricing policy that takes into account the specifics of local conditions.

The main material goal of European business, embodied in its pricing policy, is to make a profit. Other goals (the maximum possible turnover, the maximum possible sales) are also of subordinate importance. The predominance of one or another material goal essentially depends on the size of the firm. Thus, approximately 55% of small firms named “profit commensurate with costs” and “industry-wide profit” as their goals, while large firms cited “highest possible profit”. The responses also varied considerably across industries. For example, the setting for “profit commensurate with costs” was most often called in the textile and clothing industries, the market of which had already passed the stage of maturity, and the desire for “maximum profit” was typical for representatives of the fields of electronics, electrical engineering and precision mechanics, the market of which is in the stage of dynamic development.

Two-thirds of the firms surveyed stated that they were striving to expand their market share in the profile of their main products - moreover, they consider the achievement of this goal to be realistically achievable; 3/4 of the surveyed firms from sectors whose markets are in the growth stage would like to increase their market share. In weaker industries, more than half of the firms surveyed would only like to maintain their market share. In addition, according to the survey, large firms with strong market positions (80% of firms) seek to further strengthen them - among small businesses, this share is 60%

Decisions to develop a new product also depend on the size of firms. Small firms usually decide to develop a new product only if there is a specific order for it. Large firms, having significant financial reserves and the ability to maneuver, make appropriate decisions after conducting large-scale marketing research and market experiments.

Pricing policy is one of the most important activities of the enterprise, indicating its effectiveness.

You will learn:

• What are the types of pricing policy depending on the type of market.
• How to choose a pricing strategy.
• How is the pricing policy of the company formed?
• How to conduct a price analysis.
• What mistakes lead to the inefficiency of the company's pricing policy management.

What is the essence and purpose of pricing policy

If free pricing is not possible, there are two ways. The first is a severe limitation of the scope of natural prices. The second is the permission of their free movement, but with regulation at the state level. Defining the objectives of the pricing policy, the company must clearly understand what exactly it wants to achieve with the help of a particular product.

The main goals and objectives of pricing policy on a market-wide scale are to stop the decline in the production process, limit inflation, stimulate entrepreneurs, increase profits through the production of goods, and not its price. If a company knows exactly in which market it will promote its product and how it can better position itself in a competitive and consumer environment, then it is much easier for it to form a set of marketing activities, including thinking through pricing, because the development of a pricing policy mainly depends on how the company plans to position itself in the market.

However, the company may pursue other goals. If she clearly represents them, then, of course, she knows better what pricing policy suits her. Example: an enterprise may strive to survive among competitors without losing its current positions, increase revenue, become a market leader in its industry, or produce the highest quality product.

If the company has intense competition, then the main goal should be to survive. To ensure the normal operation and marketing of their products, enterprises have no choice but to sell goods at low prices in order to achieve customer loyalty. Here, the priority for them is survival, not increasing income. Until such time as the reduced prices cover costs, companies in a difficult financial situation can somehow stay afloat.

The main goal for many companies is to maximize current income. Enterprises of this category study demand and production costs in relation to different price levels and stop at such an acceptable cost that will help maximize current income and most fully cover costs. If this is the case, it means that the company is primarily focused on improving financial performance, and they are more important for it than achieving long-term goals.

Enterprises of another category strive for leadership in the industry, guided by the fact that companies that occupy the first positions operate at the lowest cost and the highest financial performance. In an effort to lead, companies reduce prices as much as possible. One of the options for this goal may be to achieve a specific increase in market share, which is the essence of the pricing policy of such enterprises.

Some companies want the quality of their products to be the highest among their competitors. As a rule, luxury products are priced quite high to cover production costs and costly research and development.

Thus, pricing policy is used by firms for various purposes, for example, to:

• increase the profitability of sales, that is, the percentage of profit to the total amount of sales income;
• increase net income equity companies (the ratio of profit to total assets on the balance sheet minus all liabilities);
• maximize the profitability of all assets of the company (the ratio of profit to the total amount of accounting assets, the basis for the formation of which are both own and borrowed funds);
• stabilize prices and income levels, strengthen market positions, that is, the company's share in total sales in a given product market (this goal can be especially significant for companies operating in a market environment where the slightest price fluctuation causes significant changes in sales);
• achieve the highest sales growth rates.

Expert opinion

Price is not the main indicator that determines the choice of the buyer

Igor Lipsits,

Professor, Department of Marketing, State University Higher School of Economics, Moscow

Many companies believe that it is the low price more than other indicators that influences the consumer's decision to purchase a product. Such businesses believe that by lowering the price, they can increase sales. But it's not. In fact, if the seller acts according to this scheme, the buyer thinks that the only advantage of the product is its low cost, and therefore does not pay attention to other important characteristics - quality, uniqueness, service.

The best option here is to increase the cost relative to competitors' products, but at the same time draw the attention of the buyer to uniqueness, service, quality and other indicators that are important to him.

How to Beat a Competitor in a Price War: 3 Strategies

In an effort to maintain consumer flow, we often get involved in price wars. However, the blind reckless implementation of such a strategy often leads to a significant loss of profit. The editors of the magazine " Commercial Director learned three strategies for winning price wars.

Types of pricing policy depending on the type of market

The pricing policy of the organization is largely determined by the type of market chosen to promote products. Below we consider four of its types. It should be noted that each of them has individual problems with pricing:

1. The market of pure competition.

In the market of pure competition interact numerous sellers and buyers of any similar products. Individual producers and consumers have almost no influence on current market prices. The seller does not have the right to set prices higher than the market prices, since buyers are free to buy goods in any quantity they need at the existing market value.

In a market of pure competition, sellers do not devote much time to the long-term formation of a marketing strategy. As long as the market remains a market of pure competition, the role of marketing research, product development activities, pricing policy, sales promotion and other processes is limited.

2. The market of monopolistic competition.

This type of market has its own specifics. It interacts a large number of sellers and consumers who make transactions not at a single market value, but in a wide range of prices. Their range here is quite wide. This is due to the fact that sellers can offer consumers products in a variety of options. Specific products have different characteristics, design, quality. The services associated with the products may also differ. The consumer understands the features of different offers and is ready to pay different amounts for them.

In order to stand out with something other than price, companies develop many offers for specific client groups, actively assign brand names to products, conduct advertising campaigns, use personal selling methods.

3. The market of oligopolistic competition.

On the oligopolistic market few sellers. Each other's pricing policy and marketing strategies cause quite a sharp reaction from them. Sellers cannot significantly influence the price level, and for new bidders, penetration into this market- the process is rather complicated. Therefore, competition here for the most part is not related to prices. Sellers seek to attract buyers in other ways: improving product quality, advertising campaigns, providing guarantees and good service.

Every seller operating in an oligopolistic market knows that if he lowers the price, the rest will definitely respond to it. As a result, the demand that has risen due to the lower cost will be distributed among all companies. The firm that cuts the price first will only get a percentage of the increased demand. If that company raises the price, others may not follow suit. Accordingly, the demand for its goods will fall much faster than it would with a general increase in prices.

4. Market pure monopoly.

In a pure monopoly market, producers control prices very carefully. Both the state and the private regulated or unregulated monopoly act here as the seller.

A monopoly at the state level can pursue a certain pricing policy to achieve different goals. For example, setting the price of products that are important to the buyer below cost makes them more affordable. If the goal is to reduce consumption, a very high price can be charged. The goal may also be to cover all costs and make a good profit.

If the monopoly is regulated, the state allows the enterprise to set the value subject to certain restrictions. If the monopoly is unregulated, the company has the right to sell goods at any price, the maximum allowable in the existing market conditions.

But monopolists do not in all cases set the highest possible prices. The law of demand states that when price increases, demand falls, and when price falls, demand rises. "Pure" monopolists remember: in order to sell an additional amount of goods, you need to lower its cost. That is, a monopolist cannot set an absolute price for its product. He does not want to attract the attention of competitors, seeking to conquer the market as soon as possible, and is wary of the introduction of state regulation.

Pricing strategies and features of their choice

1. A pricing strategy that is based on the value of the product (the strategy of "skimming the cream").

Companies using this strategy set a high price for products in a small market segment and "skim the cream" as they achieve high profit margins. The cost is not reduced so that new consumers who enter this market segment move to a higher level. You can apply such a strategy if the product in terms of its characteristics really surpasses analogues or is unique.

2. Demand following strategy.

This strategy has a lot in common with skimming. But enterprises in this case do not maintain high prices all the time and do not convince consumers to go to a qualitatively new, more solid level. Companies gradually reduce the price, carefully controlling this process.

Sometimes firms make minor adjustments to a product's design, features, and capabilities to make it different from its predecessors. It is not uncommon for companies to promote product sales, change packaging, or prefer a different method of distribution in order to keep up with lower product prices. At each new lower level, the cost remains long enough to satisfy the current demand in full. As soon as sales start to dwindle, the company immediately contemplates the next price cut.

3. Penetration strategy.

Methods of pricing policy are very diverse. There is also a so-called price breakthrough - this is the establishment of a very low cost. Companies use this method to quickly adapt to a new market and to secure cost advantages from production volumes. If the enterprise is small, such a strategy is unlikely to suit him, since he does not have the necessary production volumes, and the reaction from competitors in the retail trade can be very tough and fast.

4. Strategy to eliminate competition.

This strategy is similar to the previous one, but has different goals. Its main task is to block competitors from entering the market. The strategy is also used to increase sales to the highest possible level before the competitor enters the market. In this regard, the price is set as close to the costs as possible. This brings a small income and is justified only in the case of large sales.

For a small company, this strategy helps to focus on a small market segment. Thanks to it, there are opportunities for a quick entry into the market, making a profit in the shortest possible time and just as quickly exiting this segment.

5. Other strategies.

There are other pricing strategies, namely:

• maintaining a stable position in the market environment (when the company maintains a moderate percentage of return on equity. In the West, this figure is 8-10% for large-scale organizations);
• maintaining and ensuring liquidity - the solvency of the company (as part of this strategy, the enterprise should mainly choose reliable partners, thanks to which it could consistently make a profit; here it is reasonable for the company to switch to payment methods convenient for customers, start providing benefits to the most valuable partners, etc. );
• expansion of the company's export opportunities (this strategy is associated with "skimming" in new markets).

Pricing policy should be in line with legislative norms and not contradict them. But there are other strategies that companies are better off avoiding. Some of them are prohibited at the state level, others are contrary to accepted on the market. ethical standards. If an enterprise uses a prohibited strategy, it risks facing retaliatory actions from competitors or the imposition of sanctions by government agencies.

Here are the prohibited strategies of pricing policy:

• monopolistic pricing - the strategy is associated with setting and maintaining monopolistically high prices. Companies resort to it to get super profits or monopoly profits. There is a state ban on the use of this strategy;
• price dumping - in accordance with it, the company deliberately underestimates its prices relative to market prices in order to outperform competitors. This strategy is associated with monopoly;
• pricing strategies based on agreements between economic entities that restrict competition, including agreements aimed at:
• setting prices, discounts, allowances, margins;
• increase, decrease or maintenance of prices at auctions and auctions;
• division of the market on a territorial or other basis, restriction of access to the market, refusal to conclude agreements with specific sellers or buyers;
• pricing strategies, due to which the pricing procedure established by regulatory legal acts is violated;
• pricing and pricing policy pursuing speculative purposes.

Any pricing strategy is a condition that determines how the product will be positioned in the market. At the same time, pricing policy in marketing is a function, the formation of which is influenced by certain factors. Among them:

1. Stages life cycle goods.

This factor significantly affects both pricing and marketing strategy.

At the implementation stage, 4 types of pricing strategies are distinguished.

During the growth phase, as a rule, the level of competition increases. In this case, companies are trying to establish long-term cooperation with independent sales agents and organize their own distribution channels. Their prices usually do not change. Companies strive to maintain rapid growth in sales and, in pursuit of this goal, resort to product improvement and modernization, introduce improved products to untapped market segments, and increase advertising campaigns to encourage customers to buy again.

At the stage of maturity, the company reaches a stable level of sales, it has regular customers.

At the saturation stage, sales volume finally stabilizes and repeated purchases support it. Here, businesses are spending more time finding untapped market segments, developing strategies to win the loyalty of new audiences, and also thinking about whether and how regular customers can use the product in new ways.

To prevent a possible decline in sales, enterprises should take timely measures to prevent it - modify the product, work on quality, improve performance. Sometimes it makes sense to lower the price to make the product available to a wider consumer audience.

2. Product novelty.

The price formation strategy is also affected by what product the price is set for - a new one or an already existing one on the market.

When deciding on a pricing strategy for a new product, an entrepreneur can act in three ways, namely:

Initially, set the highest possible cost of products, focusing on wealthy buyers or those who first of all look at the quality and properties of the goods and only then at the price. After the initial demand weakens and sales volumes decrease, the entrepreneur lowers the cost, making the product available to a wider consumer audience. That is, in this case, the manufacturer gradually covers profitable market segments. This pricing policy is called skim pricing.

Companies operating in accordance with it pursue short-term goals. This strategy makes sense if:

• demand for products is quite high;
• there is an inelastic demand for the product;
• a company can effectively protect itself from competitors by obtaining a patent or by continuously improving the quality of a product;
• high cost in the eyes of buyers means good quality products.

First, the company sets low price for a product in order to fill a certain niche in the market, avoid competition, increase sales and take leadership positions. If the likelihood of competition persists, the company can, by reducing costs, further reduce the cost of goods. Another option is the desire to become a leader in quality. In this case, the firm can increase the cost of scientific and technical development and increase prices.

If there is no threat of competition, the enterprise needs to increase or decrease the cost in accordance with demand. However, it should be borne in mind that a price increase is justified only when the company is one hundred percent sure that its product is recognizable and in demand in the consumer environment.

The company operates in accordance with the strategy of "strong implementation" (penetration pricing), seeking to achieve long-term goals. This pricing policy is suitable for the company if:

• the demand for its products is quite high;
• there is an elastic demand for the product;
• low prices do not attract competitors;
• low prices in the eyes of consumers are not synonymous with low-quality products.

3. The combination of price and quality of goods.

Pricing policy is a function that determines the positioning of products in the market environment by choosing the best combination of price and quality.

• Product quality control that should not be neglected

Table 1. Types of strategies based on price and quality

Strategies show how quality affects price changes. In the same market, strategies 1, 5 and 9 can be applied simultaneously. For them to be successfully implemented, the corresponding categories of buyers must be present in the market.

Strategies 2, 4, 6, 8 are transitional options.

The purpose of strategies 2, 3 and 6 is to oust competitors from positions 1, 5 and 9; they are strategies for generating cost advantages.

Strategies 4, 7 and 8 show how prices rise in relation to the consumer characteristics of the product. If the competition in the market is high, the reputation of the company from the application this method may get hurt.

4. The structure of the market and the place of the company in the market environment.

The determining factors of pricing policy here are leadership, market development, exit from it, etc. Generally speaking, monopoly in the market environment is not synonymous with uncontrolled price growth, since there is always a risk of competitors with less costly production technology or equivalent products. If such a situation arises, new competitors get the opportunity to firmly establish themselves in the market, occupy a significant part of it and get ahead of the segment leader who is improving its lagging technologies. That is, to be a leader in pricing, market prices must be maintained at a fairly high level so that the returns of funds continue to attract new investment, but also keep them low enough to avoid competition.

Markets that are in an intermediate position between an oligopoly and a market with large quantity suppliers may be partly controlled by mutual agreement.

5. Competitiveness of goods.

This pricing policy assumes that the company compares its product with competitors' products and sets the price based on demand. Do not forget about the influence of other factors, including the reputation of the company, the types and methods of distribution of products used, which contribute to the formation of the competitiveness of the company and its products.

This strategy can be considered safe only if the company is the undisputed leader in terms of its products. The firm also needs to know how consumers from different segments in the domestic and foreign markets are guided when buying. At the same time, it may be difficult to determine the prices of competitors due to their discounts and additional services, for example, free delivery, installation.

The strategies described above are far from all the options that an enterprise can use when setting prices. Each company has the right to develop its own pricing policy, based on many individual criteria.

Expert opinion

The only rational pricing principle is profit orientation

German Simon,

CEO Simon-Kucher & Partners Strategy & Marketing Consultants, Pricing Expert, Bonn

My experience is that the price that brings the maximum profit is significantly lower than the price that gives the maximum profit.

If you have a linear demand curve and linear function cost, the price that maximizes revenue will be half the maximum price. The price that maximizes profit is midway between the maximum price and the variable cost per unit.

I'll give you an example. The company sells machine tools at a maximum unit price of $150. Variable cost per unit is $60. Wherein:

• the price that maximizes revenue is $75 (150:2). Losses in the sale of goods at this cost amounted to $ 7.5 million;
• the profit-maximizing price is $105 (60 + (150 – 60) : 2). Profit amounted to $10.5 million.

To maximize profits, change the motivation system. Tie the seller's commission to the size of the discount: the smaller it is, the greater his premium. Our company has organized such systems for enterprises operating in various industries. Discounts are reduced by a few percent, but sales remain at the same level. Buyers stay with us. In order for the company to achieve better results, the rep's tablet or computer must be able to see changes in the amount of his commission during price negotiations.

Expert opinion

4 Simple and Effective Ways to Manage Price

Yuri Steblovsky,

Customer Service Specialist, Runa

1. Cautious price increase. The main ones of this type are gradual changes and work to ensure that buyers do not immediately notice them. It is necessary to increase the cost not for all goods in the assortment, but only for those products that customers do not use every day.
2. Price testing. On different days, a different price is set for the product, and then they analyze which buyers responded to the most.
3. Work with special offers. If a trade point mainly sells products at low margins, customers should be offered the highest margin products as ancillary products.
4. Customization. Assumes individualization of sales. For example, if a store sells mugs, it may offer the customer to purchase a product with a print of their choice, costing twice as much as an analogue with a manufacturer's pattern. Constantly conduct experiments and evaluate their results. Customization is a mandatory component in business development.

• How to sell goods more expensive and earn more: 8 easy ways

Pricing Factors Affecting Pricing

The company's choice of pricing policy is determined by a number of factors. Let's consider each of them.

• value factor.

This is one of the most important indicators when choosing a pricing policy. Any product, to a greater or lesser extent, is able to satisfy the requirements of the buyer. In order to reconcile the value and usefulness of a product, the company can give it more value - through promotional activities to show the buyer how good it is, and set a price that would correlate with its real value.

• Cost factor.

The minimum cost of production consists of costs and profits. The easiest pricing method is to add an acceptable rate of return at known costs and expenses. But, even if the cost covers the costs, there is no guarantee that the goods will be bought. In this regard, some manufacturing companies go bankrupt when the price of their products on the market becomes less than the production costs and costs associated with its implementation.

• Competition factor.

Pricing is highly dependent on competition. A company can increase competition by choosing a high cost, or eliminate it by setting a floor price. If the creation of a product involves a complex production process or a special way of production, then the low cost will not attract competitors. But with high prices, rival companies will understand what to do.

• Sales promotion factor.

The cost of production includes a trade margin, designed to recoup all activities aimed at stimulating sales. When a product enters the market, advertising must cross the perceptual threshold before consumers become aware of the new product.

In the future, funds from the sale of goods should cover the costs aimed at stimulating sales.

• distribution factor.

The cost of production largely depends on its distribution. The closer the product is to the customer, the more expensive it is for the company to distribute it. If the product goes directly to the buyer, then each transaction will turn into a separate operation. The funds owed to the supplier will be received by the manufacturer, but at the same time, his production costs will increase.

This method of distribution is good because it allows you to fully control sales and marketing. If a product is bought by a large retail consumer or wholesaler, sales are no longer calculated in units, but in tens. At the same time, control over the sale of goods and marketing is lost.

Distribution is the most important factor in marketing after the product itself. The product is not always able to fully satisfy the requirements of all consumers. Understanding this, manufacturers, depending on the price level, are more or less willing to make concessions in quality, weight, color, characteristics, etc. But, even if the seller, offering the lowest prices in his market segment, does not have the goods at the right time in right place, no promotional activities will help him.

Finding professional distributors who would be willing to sell a product is a rather costly process. Intermediaries want to receive a decent reward for storing products in warehouses and distributing them. The amount for these purposes must be included in the cost of goods. At the same time, the company must ensure that the costs do not exceed those of competitors.

• public opinion factor.

The pricing policy of the company largely depends on this driving force. As a rule, buyers have an established opinion about the cost of products. It does not matter if it is consumer or industrial.

When purchasing a product, people take into account certain price limits within which they are ready to buy it. The company must either not go beyond them, or let the buyer understand why the cost of the product does not fit into this framework.

Let out production on the characteristics can be better than analogues. If the audience perceives these advantages positively, then the cost can be increased. If the product does not have obvious advantages, the company should conduct additional advertising campaigns or otherwise stimulate sales.

• service factor.

There is a pre-sales, sales and after-sales service. The cost of it should be included in the cost of the proposed products. Such expenses, as a rule, include activities related to the preparation of quotations, calculations, installation of equipment, delivery of products to the point of sale, training and retraining service personnel(salespeople, cashiers, customer relations consultants), the provision of a guarantee or the right to purchase on an installment basis.

Many types of goods do not need after-sales service. However, at the same time, a significant part of consumer goods (products, everyday goods) involves pre-sales service, for example, their placement in a window, demonstration of characteristics. The cost of all these services must be included in the price of the goods.

• Customer service rules that increase sales in 3 steps

Development and formation of pricing policy: 7 stages

1. First, the enterprise determines what goal should be pursued. For example, it can be a new level of sales or business development in general.
2. The next step is internal marketing research. The production capacity of equipment, the cost of issuing wages to personnel, the cost of raw materials and materials, the cost of delivering products to points of sale and finding new distribution channels, investments in marketing activities to promote sales, etc. are estimated.
3. Next, the company looks at what the pricing policy is, how flexible it is, how it is formed, what price range installed on similar products, how changing market factors affect the preferences of buyers.
4. At the fourth stage, the enterprise decides how it will set the retail price for goods. The main criterion in determining the approach to pricing is the highest possible profit from sales.
5. The fifth stage is the development of programs for adapting value to a changing market environment. The company analyzes what determines the level of demand among buyers and because of what the price has to be adjusted. This need may be determined by:

• an increase in the cost of the production process and the salary of employees;
• the need to increase production capacity and attract additional labor;
• the general state of the economy, the prerequisites for the emergence of a crisis;
• the quality of the goods;
• a set of functional properties of the product;
• availability of similar products on the market;
• the prestige of the brand under which the products are sold;
• income of potential buyers;
• stages of the product life cycle;
• dynamics of demand development;
• market type.

These parameters can be combined with each other and supplemented by other conditions. The main difficulty at this stage is that most of the indicators cannot be measured quantitatively.

6. The sixth stage is the final one, where the value of the goods is converted into a monetary equivalent. The result of the pricing policy is always the price, the correctness of which is judged by the buyer. It is he who decides how optimally the consumer value of the product and its monetary expression are combined with each other.

Before using this or that pricing policy, it is impossible not to take into account the general retail price level in everyday dynamics. Such data can be provided by statistical directories, directories of various companies and other sources.

How to Conduct a Pricing Analysis

Analysis of pricing policy involves the study of the price level. Experts discuss whether the current cost of a product can ensure profitability, how attractive it is compared to competitors' prices, how elastic demand is in terms of prices, what kind of pricing policy the state is pursuing, and also look at other parameters.

When a company sets unfavorable prices, it finds out what is causing it. The formation of unprofitable value may be due to the need to maintain sales at the same level with a decrease in the quality of goods, the policy of capturing the market, government pricing policy and other reasons. When a company evaluates how much the cost of its products is attractive to buyers, it compares its prices with the average prices of competitors for similar products in the industry.

If demand is elastic and the firm sets itself the goal of capturing the market, then it can lower the price. If she wants to maintain the market share she occupies, she can increase the cost. If you plan to maximize profits, you should set the optimal price.

The basis for constructing the cost function can be the method of direct calculation (selective), algebraic or mixed method. The basis for calculating the optimal cost and level of sales is the profit maximization condition, which is achieved if marginal cost and marginal revenue are equal.

The maximum profit is calculated as a derivative of the income function:

(C x D)’ = (a0 x D2 + a1 x D)’ = 2 a0 x D + a1

Economically, marginal cost is the cost of producing an additional unit of a good. Other equal conditions they are equal to variable costs per unit of output. The mathematical derivative of the cost function also makes up the variable costs per unit of goods:

С '= (VCed x D + FC) '= VCed

Imagine the equality of marginal revenue and marginal cost:

2 a0 x D + a1 = VCed

In this case, the following formula is used to calculate the optimal sales volume (Dopt):

Dopt \u003d (VCed - a1) / 2 a0

To calculate the optimal price (Copt) use the following formula:

Copt \u003d a0 x Dopt + a1

Based on the results of the analysis of the pricing policy, the company can determine how effective the current strategy is and, if necessary, make changes to it. Adjustments to the pricing policy should be made taking into account the life cycle or type of product. For example, if an enterprise has recently started producing a product, the pricing policy should be aimed at capturing the market environment. If the product is going through a stage of maturity, the price should be set with the aim of obtaining a short-term profit. If the product is in a recession period, the cost is formed in such a way that it is possible to maintain the previous level of sales.

The market economy is based on financially independent commodity producers, for whom price is a decisive indicator of production and economic activity. If the company has chosen the right pricing strategy, correctly forms the cost and uses economically verified methods of pricing policy, then it will certainly achieve success and good financial performance in its work. Its form of ownership does not matter.

Mistakes that make price management ineffective

Pricing policy is one of the fundamental factors influencing the successful operation of the company. In this regard, prices should be formed very thoughtfully.

Often, marketers and business leaders make a number of mistakes that lead to unsatisfactory economic performance. You need to constantly be in close contact with production shop to know about all the items of expenditure, without exception, that appear in the manufacture of goods. If the company misses even the slightest detail, then in the future it risks reducing the efficiency of its work.

Before launching products for sale, it is imperative to carry out a detailed marketing research. Based on its results, one can judge how valuable the product is to the buyer. If the company decides that it is not necessary to carry out this activity, then it may well set an unreasonably low cost and miss out on the potential profit that would allow it to expand production.

You should also pay attention to the actions of competitors, in particular, to what kind of pricing policy they are pursuing. You need to explore several possible scenarios that determine the reaction of competitors to your events. If you underestimate your competitors, you may well lose your market position to them due to an inefficient pricing policy.

Pricing policy of an enterprise on the example of well-known companies

• Coca Cola.

The pricing policy of The Coca-Cola Company focuses on seasonal demand. Because in summer time people consume soft drinks in the largest quantities, the company "negotiates" the price from resellers. That is, if intermediaries set a margin, the amount of which does not exceed 15%, the goods are sold on preferential terms. As a result, the final price for Coca-Cola goods is formed. Such pricing and pricing policy allow The Coca-Cola Company to take a leading position among domestic and foreign manufacturers for a very long time.

• Danone.

Today Danone company is the undisputed market leader in dairy products. This position allows her to set the highest possible prices, while offering the buyer a product of excellent quality. Such a pricing policy brings the company super profits - it "skimmes the cream" from the segment of buyers who have a special commitment to the brand. When a given category becomes saturated with products, Danone begins to gradually reduce prices in order to gain loyalty among consumers in other groups.

• Aeroflot.

The company's pricing policy is that Aeroflot offers a variety of tariffs presented in three directions: a simplified tariff scale, rates for selling on the Internet and packages of new offers. Prices for air tickets of all three categories allow the company to receive a good income and take a leading position in the market in its industry.

Aeroflot's pricing policy is built in such a way that each passenger can choose the best price conditions for themselves. The enterprise takes into account the dynamics of pricing proposals of competing companies and uses the data obtained in the work. It should also be noted that Aeroflot air transportation is available to many categories of customers, since the company provides preferential rates and various discounts.

• Apple.

The company has managed to build such a pricing policy that the price per unit of goods cannot be lower than $ 1,000, and with the release of each new product model, brand adherents immediately want to purchase it. The results of expert assessments indicate that the value of the enterprise will very soon reach one trillion dollars, which will make Apple the most valuable brand in history.

Even at the very start, Apple's pricing policy was tough. The company was guided by the fact that most of the consumer audience perceives "expensive" as "high-quality" and does not attach much importance to overpayment.

Apple does not use the discount system. The only exceptions are cases when students can purchase brand products a little cheaper, but even here the buyer's savings do not exceed $ 100.

This pricing policy is followed by both sales representatives and resellers. Buy at a discount new products Apple can only be on the Internet, for example, on eBay.

• Samsung.

Samsung's pricing policy is based on two main principles. First, the company focuses on a brand that occupies a leadership position. Secondly, it uses methods of psychological influence on the consumer. The price per unit of goods is never expressed as a whole number, for example, 4990 rubles.

Samsung products are designed for consumers with average incomes and above. Despite the low cost, the brand's products are of very high quality. A small component of the price falls on the payment of warranty service. Its presence increases the loyalty of consumers who are focused on buying equipment and comparing offers from different manufacturers.

Information about experts

Igor Lipsits, Professor, Department of Marketing, State University-Higher School of Economics, Moscow. Igor Lipsits - Doctor of Economics, Professor. Author of 20 monographs and textbooks. Advises foreign and Russian companies(including RAO UES of Russia, AFK Sistema) on marketing and business planning.

German Simon, CEO of Simon-Kucher & Partners Strategy & Marketing Consultants, pricing expert, Bonn. German Simon - Director of Simon-Kucher & Partners Strategy & Marketing Consultants (New York). The company has 33 offices in 23 countries. Pricing expert. Included in the top five recognized experts in the field of management along with Peter Drucker, Fredmund Malick, Michael Porter and Philip Kotler. In the fall of 2016, his book Confessions of a Pricing Master was published in Russia. How price affects profit, revenue, market share, sales volume and company survival” (M.: Byblos, 2017. - 199 p.).

Introduction

In modern market conditions, the price of a product is the lever of the economic mechanism, on which the successful development of an enterprise, its income and expenses, its position relative to competitors, growth prospects, and a number of other factors have become largely dependent.

Carefully developed pricing policy is an important component of the company's functioning. Knowledge and management of the pricing mechanism, methods of establishing and regulating prices for manufactured goods help to determine the feasibility of achieving short-term and long-term financial and economic results of entrepreneurial activity, the use of new pricing mechanisms is a competitive advantage over other enterprises.

The purpose of this work is to determine the role and importance of the pricing policy of an enterprise, to consider modern pricing mechanisms that meet the realities of the market.

According to the modern concept of enterprise management, a reasonable pricing policy for manufactured products and pricing strategies developed on its basis occupy a special place in the functioning of the company.

The main advantages of price as an essential element of competitive policy, which has a direct impact on the development of the enterprise, its sustainability and prospects for further growth, are that:

It is faster and easier to change the price than, for example, to develop new product, conduct an advertising campaign or find new, more effective ways to distribute products;

The pricing policy of the enterprise instantly affects the business, its financial and economic results.

For this reason, special attention should be paid to the development of a pricing policy by the management of an enterprise that wants to most effectively develop its activities in the market, since any mistake or insufficiently thought-out action immediately affects the dynamics of sales and profitability.

The pricing policy of an enterprise can be viewed as a multifaceted concept. The enterprise does not just set a particular price, it creates its own pricing system, which includes the entire range of products, which takes into account differences in production and marketing costs for certain categories of consumers and for different geographical regions, specifics in demand levels; seasonality of consumption of goods and other factors.

In addition, the constantly changing competitive environment of the firm should be taken into account. Sometimes the firm itself takes the initiative to change prices, but often it simply reacts to the actions of competitors.

Enterprise pricing policy

Pricing policy is the most important mechanism that provides many priorities for the economic development of the enterprise. It significantly affects the volume of the enterprise's operating activities, the formation of its image and the level of financial condition in general. Pricing policy is an effective instrument of competition in the commodity market.

The price policy of the company is an important element of the overall strategy of the company, which is included in the market strategy and combines both strategic and tactical aspects. Policy is understood as the general positions that the organization is going to follow in the field of setting prices for its goods and services, and with the help of which it is going to achieve its main goals (further development of the organization, in a short time to get the maximum profit, in a short time to increase turnover, improve product quality). etc.).

The relevance of the study of this topic is determined by the fact that in a market economy, the commercial result of any organization largely depends on the right pricing policy, that is, on the methods and strategies used by the enterprise.

Right or wrong pricing policy has a lasting impact on the entire operation of the enterprise's value chain. With various versions of the pricing policy, pricing work is carried out jointly with the company's divisions that are responsible for assessing and forecasting the cost of production, financial results, and production and marketing policy.

One of the main components of a market economy are prices, pricing, pricing policy. Price is the monetary expression of the value of a commodity.

Previously, Russia was dominated by a system of stable, state-approved wholesale and retail prices. They didn't respond publicly necessary costs labor. In 1991, after the start of market reforms, prices rose rapidly, increasingly approaching world prices for individual goods.

The correct determination of the price allows the company:

1. Improve production efficiency;

2. Increase the competitiveness of the company and its services in the market;

3. Capture a wider market segment;

4. Increase the level of sustainability and stability of the company's operation in the market.

The essence of a targeted pricing policy is to introduce such prices for goods, to manage them in such a way in connection with market conditions, in order to get its maximum possible share, achieve the intended profit volume and successfully solve all strategic and tactical tasks. Pricing policy is the overall goals of the organization, which it seeks to achieve through the formation of the price of its product.

Pricing policy corresponds short term the existence of the organization. The clearer the organization's understanding of the goals, the easier it is to set prices for its product.

Pricing in an organization is a difficult and multi-stage procedure. Consider the stages of the pricing process (Figure 1).

Each organization must first establish what purpose it pursues by publishing a particular product. If the goals and position of the product in the market are precisely established, then it is easier and easier to determine the price.

Definition of demand. It cannot be eliminated or delayed, since it is absolutely impossible to calculate the price without examining the demand for this product. However, it must be borne in mind that a high or low price, determined by the organization at once, will not affect the demand for the product in any way.

Figure 1 - Stages of the pricing process

Cost analysis. Demand for a product sets the upper level of the price determined by the organization. Gross production costs (the sum of fixed and variable costs) set the lowest price. This is important to take into account when lowering the price, if there is a real risk of incurring losses due to the fact that the price level was set lower than the costs. An organization can pursue such a policy only for a short period when penetrating the market.

Competitor price analysis. A significant impact on the price is shown by the behavior of competitors and the prices of their goods. Any organization must know the prices of competitors' products and character traits their products. For this purpose, the products of competing firms are purchased. Next is comparative analysis prices, products and their quality from competitors and this organization. The company has the opportunity to use the acquired data as a starting point for pricing and establishing its place among competitors.

Choosing a pricing method and setting the final price. Having passed all these stages, the organization has the opportunity to start setting prices for products. The optimally possible price must fully compensate for all the costs of manufacturing and selling products, and in addition, guarantee a certain rate of profit.

There are 3 options for setting the price level:

the minimum level, which is determined by the costs;

maximum level based on demand;

the best possible price level.

There are a number of factors that significantly affect the pricing process in an organization, creating certain boundaries in which the company has the opportunity to operate. First of all, these factors affect the degree of freedom of action of the organization in the formation of prices for its own products.

For any organization, the question of prices is a matter of its existence, well-being and a decisive means to achieve its business goals. Regardless of the strength of the organization's position in the market, it cannot set prices without considering the possible consequences of such a decision. Price is the main element of competitive policy and has a huge impact on the market position and income of the organization. Thus, for successful entrepreneurial activity in a market economy, an organization needs a well-developed pricing policy. Setting prices for products (goods, works and services) of an organization is largely an art, since a low price can cause buyers to associate with the low quality of the product offered, a high price can exclude the possibility of purchasing this product by many buyers. Under these conditions, it is necessary to correctly form the pricing policy of the organization.

Pricing policy of the organization - this is the activity of its management in establishing, maintaining and changing prices for manufactured products (goods, works and services), carried out as part of the overall strategy of the organization.

The sequence of developing the pricing policy of the organization:

• 1. Determination of the main goals of pricing.
• 2. Analysis of pricing factors - demand, supply, competitor prices, etc.
• 3. Choice of pricing method.
• 4. Formation of the price level and the system of discounts and price surcharges.
• 5. Adjustment of the pricing policy of the organization, depending on the prevailing market conditions.

There are the following the main objectives of the pricing policy organizations that are shown in Figure 12.1.

Rice. 12.1.

The organization independently determines the mechanism for developing a pricing policy based on the goals and objectives of its development, organizational structure, management methods, production level and other factors of the internal environment, as well as environmental factors of the organization - the type of market, distribution channels, government policy, etc.

Mechanism for the development and implementation of pricing policy:

• 1- th stage. Determination of pricing objectives based on an analysis of the state of affairs of the organization in the commodity market and the overall strategy of the organization.
• 2- th stage. Determining the demand for the products offered by the organization (goods, works and services), which will determine the maximum possible prices.
• 3- th stage. Evaluation of production costs, their changes from the volume of production, which will determine the lowest possible prices.
• 4- th stage. Analysis of competitors' prices for similar products (goods, works and services).
• 5- th stage. The choice of the pricing method, on the basis of which the initial - possible (pre-market) price will be set. When the product enters the market, they will correct and set the final (market) price for this product according to the chosen pricing strategy.

Pricing strategy- this is a reasonable choice from several price options based on the factors and methods that it is advisable to follow when setting market prices for specific types of products (goods, works and services), aimed at achieving the maximum profit of the organization.

The pricing strategy is developed based on the characteristics of the products offered (goods, works and services), the possibility of changing prices and production conditions, as well as the market situation and the balance of supply and demand.

Factors that determine the choice of pricing strategy:

• - the speed of introducing a new product to the market;
• - market share;
• - the degree of novelty of the goods sold;
• - payback period of capital investments;
• - degree of monopolization, price elasticity etc.;
• - the financial position of the organization;
• - Relations with other manufacturers in the industry, etc.

The main types of pricing strategies:

• - High price strategy (cream skimming strategy) - applied from the very beginning of the appearance of a new product on the market. It sets the highest possible price, designed for a consumer who is ready to buy a product at that price. Such a strategy provides a sufficiently large profit margin, allows you to restrain consumer demand, helps to create an image of a quality product among buyers, and is effective only if there is some restriction of competition. The condition for success is the existence of sufficient demand.
• - Average price strategy (neutral pricing)- pricing for new products is carried out on the basis of accounting for actual production costs, including the average rate of return on the market.
• - Low Price Strategy (price breakthrough strategy, market penetration strategy) - is used to attract the maximum possible number of buyers - the organization sets a significantly lower price than competitors' similar products. This strategy is used only when large volumes of production allow the total mass of profit to compensate for its losses on a separate product, and has an effect with elastic demand if the increase in production volumes reduces costs.
• - Target price strategy. A number of strategies are used here. Psychological price strategy - the price is determined at a rate slightly below the round sum, while the buyer is given the impression of a very exact definition production costs and the impossibility of cheating. Prestigious pricing strategy - based on setting high prices for goods High Quality. Long term price- is established for consumer goods, is valid for a long time and is weakly subject to changes.
• - Flexible price strategy - is based on prices that react quickly to changes in supply and demand in the market.
• - Linked pricing strategy (moving price strategy)- is based on the fact that the price is set almost in direct proportion to the ratio of supply and demand and gradually decreases as the market is saturated. It is used most often for products of mass demand. The purpose of such a strategy is to prevent competitors from entering the market. When establishing such a strategy, it is necessary to constantly improve product quality and reduce production costs.
• - Follow the leader strategy the price of a product is set based on the price offered by the main competitor that dominates the market. The condition for success is the existence of sufficient demand.

Pricing policy is the actions of not only pricing entities, but also authorities state power and local self-government, which are aimed at the implementation of price regulation in all areas of activity. Distinguish between direct and indirect methods state regulation prices.

Methods of direct price regulation by the state:

• - administrative price setting;
• - "freezing" of the price;
• - setting a price limit;
• - regulation of the level of profitability;
• - setting standards for determining prices;
• - declaration of prices, etc.

Methods of indirect price regulation by the state:

• - taxation;
• - regulation of money circulation;
• - salary;
• - credit policy;
• - regulation of public spending;
• - setting depreciation rates, etc.

With methods of direct price regulation, the state directly affects prices by regulating their level, setting profitability standards or standards for the elements that make up the price, or by other similar methods. With methods of indirect price regulation, the state sets the discount rates of interest, taxes, income, the level of the minimum wage, depreciation rates, etc.

5. PRICE POLICY

Price policy- this is the management of the enterprise's activities in establishing, maintaining and changing prices for manufactured products, carried out in line with the concept of marketing and aimed at achieving its goals.

A significant influence on the formation of the pricing policy of the enterprise has a type of market in which it operates. The basis for determining the type of market is the number of firms operating in the market. The analysis parameters are also: the type of product (the degree of its homogeneity and standardization), price control, conditions for entering the industry, the presence of non-price competition, the importance of marketing.

Based on the analysis of these parameters, four main types of market are distinguished: the market of pure competition, the market of monopolistic competition, the oligopolistic market and the market of pure monopoly (Table 26).

The market of pure competition consists of many sellers and buyers of a standardized product. There are no serious legal, organizational, financial or technological restrictions to enter the industry. Since each firm produces a small fraction of the total output, none of them has much effect on the price level. Sellers in such markets do not spend much time developing a marketing strategy, since its role in such a market is minimal.

The number of firms operating in the market of monopolistic competition is large, but there are much fewer participants in the markets of pure competition. As a rule, these are 20-70 enterprises. Entering the industry is fairly easy. Transactions in such a market are made in a wide range of prices. The presence of a price range is explained by the ability of manufacturers to offer buyers different options for goods. Products may differ from each other in quality and appearance. Differences may also lie in the services associated with the goods. Buyers see the difference in the offer and agree to pay for goods in different ways. Price controls are limited because there are enough firms for each to have a small share of the total market. In such a market, the use of marketing activities is of great importance, but they have less influence on each individual firm than in an oligopolistic market.

Table 26

Characteristics of market types

An oligopolistic market consists of a small number of producers (usually 2 to 20) sensitive to each other's marketing strategies. The small number of sellers is explained by the fact that it is difficult for new applicants to penetrate this market due to the presence of a complex of barriers: the need for large initial capital, ownership of patents, control over raw materials, etc. Goods in such a market can be standardized (steel) or differentiated (cars). The degree of price control exercised in various forms is high.

In a pure monopoly, there is only one seller in the market producing a product that has no close substitutes. It can be a government organization, a private regulated or unregulated monopoly. The state monopoly can pursue the achievement of various goals with the help of price policy. A regulated monopoly is allowed by the state to set prices that ensure a "fair" rate of return. An unregulated monopoly sets its own prices. Entry into a monopoly industry is blocked by various barriers.

Thus, each type of market has its own mechanisms, so the implementation of the same actions in the field of pricing policy in different markets leads to different results and has different meanings.

The method of establishing the initial price for goods consists of six stages.

1. Setting pricing objectives

Pricing objectives stem from the goals and objectives of the overall marketing policy of the enterprise. The main goals are presented in table. 27.

Table 27

Pricing Goals

2. Determining the level of demand

Demand depends on price, and the degree of this dependence is determined by elasticity. Elasticity of demand- a quantitative characteristic of demand, reflecting a change in the magnitude of demand in response to a change in the price of a product or some other parameter. There are two types of elasticity of demand:

direct price elasticity of demand;

income elasticity of demand;

cross price elasticity of demand.

3. Cost estimate

The level of costs for the production and sale of goods allows you to determine the minimum price that the company must charge to cover them.

4. Analysis of prices and products of competitors

A firm's pricing is influenced by the prices of competitors' products. Focusing on a comparative analysis of the quality of competitors' products and their prices, the company is able to determine the average price range for its products.

5. Choosing a Pricing Method

The most common pricing methods are: “cost plus markup”, break-even analysis and target profit, pricing based on the perceived value of the product, pricing based on the level of competition, aggregate and parametric method.

The “cost plus markup” method is the simplest way of pricing, it consists in charging a certain markup on the full cost of goods. The prevalence of this method, in addition to simplicity, is also determined by the fact that manufacturers are more aware of costs, rather than demand. This method is considered fair; if all sellers use it, then prices for similar goods are similar.

At the same time, the “cost plus profit” method also has significant drawbacks: it is not related to current demand and does not take into account the consumer properties of goods. In addition, full costs include fixed costs that are not associated with the production of a particular product, the methods of their allocation to products are conditional and can lead to price distortions.

Determining the price based on break-even analysis and ensuring the target profit is based on the appointment of a price level that will provide the company with the desired amount of profit. Determination of the price by this method can be performed by calculation and graphic method.

The obvious advantage of this method is the provision for the company of the planned profit. The disadvantage is that this method does not take into account the price elasticity of demand. Its use can also lead to a distortion of the real picture due to the conditional allocation of fixed costs to individual products.

The perceived value pricing method considers the consumer's perception of the product as the main factor to be considered. To form in the mind of the consumer the desired idea of ​​the value of the product, non-price methods of influence are used.

Competitive pricing (current price method) considers competitors' prices as the starting point for pricing, with own costs and demand only taken into account as additional factors. This method is especially popular in pure and oligopolistic competition markets. In an oligopolistic market, this method is embodied in the policy of “following the leader”.

The aggregate method is used for goods consisting of individual products or assemblies (parts) and consists in a simple summation of prices for individual elements of the product.

The parametric method is based on determining the price of a product based on a comparative formalized analysis of the characteristics of the product in relation to similar characteristics of the base product with a known price.

6. Price setting

By using the selected pricing method, the original price of the item is determined.

7. Development of the dynamics of changes in the initial price of goods

The dynamics of changes in the initial price of goods depends on the chosen strategy. When changing the price of new products, two main strategies are used: “skimming” and “strong adoption”.

The cream-skimming strategy consists of initially setting a high price for a novelty based on narrow market segments and then gradually lowering the price to reach the rest of the segments in a stepwise manner. The “strong adoption” strategy is based on using initial low prices to cover the widest market, with the possibility of increasing them later.

When developing price dynamics for existing products, two main types of strategies can be used: the trailing falling price strategy and the preferential price strategy.

The sliding falling price strategy is a logical continuation of the cream skimming strategy and lies in the fact that the price consistently slides along the demand curve, changing depending on the market situation. The preferential price strategy is a continuation of the solid introduction strategy, its essence is to achieve an advantage over competitors in terms of costs (then the price is set below competitors' prices) or quality (then the price is set above competitors' prices so that the product is regarded as high quality).

In addition to making strategic decisions, it is also necessary to develop pricing tactics, that is, to carry out market price adjustments. Tactical decisions include decisions regarding the establishment of:

standard or flexible prices;

uniform or discriminatory prices;

psychologically attractive prices;

price discount systems.