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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 one's assumptions regarding the relationship between the product's price and the number of units that can be sold at that price.
Yield management (YM) [4] has become part of mainstream business theory and practice over the last fifteen to twenty years. Whether an emerging discipline or a new management science (it has been called both), yield management is a set of yield maximization strategies and tactics to improve the profitability of certain businesses.
Price-based selling is a specific selling technique in which a business exclusively reduces their price in attempt to close the sales cycle. Price-based selling clearly exists in businesses such as: commodity sales, auto sales, hospitality, and even some retail stores.
The price of a product has different functions: for the producer, the most important one is to produce revenues [1] and to cover the costs of production, distribution and sale of a product. [2] Price also signals quality and reflects existing supply and demand. It can promote competitive advantages by helping to achieve various marketing ...
Cost-plus pricing is the most basic method of pricing. A store will simply charge consumers the cost required to produce a product plus a predetermined amount of profit. Cost-plus pricing is simple to execute, but it only considers internal information when setting the price and does not factor in external influencers like market reactions, the weather, or changes in consumer va
The EVC process enables businesses to capture more value than a traditional cost-plus pricing strategy. Companies can leverage the method to estimate the value a customer derives from purchasing a product or service. The EVC is calculated by adding both tangible and intangible value elements a product or service provides to a customer. [2]
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Value-based pricing: (also known as image-based pricing) occurs where the company uses prices to signal market value or associates price with the desired value position in the mind of the buyer. The aim of value-based pricing is to reinforce the overall positioning strategy e.g. premium pricing posture to pursue or maintain a luxury image.