Pricing methods are divided into three main types

Discuss hot database and enhance operational efficiency together.
Post Reply
Joywtome231
Posts: 595
Joined: Sun Dec 22, 2024 4:06 am

Pricing methods are divided into three main types

Post by Joywtome231 »

Next we will consider the formulas by which the price is set in one method or another. Many of them will feature 2 concepts:

Fixed costs are expenses that a company must incur on an ongoing basis, regardless of how much product it produces and sells. For example, office rent, administrative staff salaries.
Variable costs are those that are directly related to the volume of chile phone number list products produced: materials, wages of shop workers, packaging, and so on.

Let's look at several methods of price formation.

Costly
Cost-based pricing methods most often help large companies correctly determine the cost of a product, goods, or service, based mainly on their internal needs and indicators. They are based on the analysis of all costs associated with the production and sale of products.

1. Cost plus markup method
This method involves adding a fixed markup to the cost price (variable costs) of the product.


2. Full Cost Method - Cost-Based Pricing
Here, the desired profit is added to the total cost price (the total of fixed and variable costs) of the product. The method allows for a more accurate determination of the minimum price necessary for the sustainable functioning of the company, taking into account all possible expenses.


3. Marginal cost method
This pricing method is relevant for those who want to increase the volume of sales of goods within the framework of an existing production. It is used if the current business model already covers fixed costs - that is, the business is at zero or makes a profit.
Post Reply