Calculation and market pricing methods. Pricing Methods

Chapter 10 Pricing Policies and Practices Before all commercial and non-profit organizations The problem arises of setting prices for your goods or services. A single price for all buyers is a relatively new idea. It only became widespread with

Question 24 Methods of collecting marketing information Answer Marketing information can be obtained during one of three types of research (Fig. 24): desk research; field; combined. The goals of desk research are the collection and processing

Question 25 Methods for obtaining primary information. Observation Answer Observation is the passive registration by the researcher personally or by technical devices of certain processes or actions of people. The main conditions for conducting observation are: recording

Question 26 Methods for obtaining primary information. Experiment Answer An experiment is a research method used to assess cause-and-effect relationships, implying the active intervention of researchers in certain processes: they change one parameter or

Question 27 Methods for obtaining primary information. Poll Answer Poll – finding out the subjective opinions and preferences of respondents (persons surveyed) in relation to any object. The surveys are very diverse. The classification of surveys is given in Table. 21.Table 21

Question 10 What are management methods? Answer Management methods are rules and procedures, following and implementing which allows the manager to achieve the main goal of management: ensuring harmonious development managed object. This means that everything

Question 145 What are structural methods of conflict resolution? Answer There are four of these methods.1. Clarification of job requirements. The better employees understand their task and the result that needs to be obtained, the less likelihood of conflict.2. Coordination and

Pricing methods The pricing method is determined based on an analysis of the state of demand, production and sales costs, and the level of competition. There are several pricing methods: cost-based, target profit-oriented,

Pricing issues The importance of the issue of “correct” pricing does not require explanation or evidence. Let's limit ourselves to indicating the main goals of pricing.? Achieving maximum store attractiveness at prices for target buyers.? Security

When using methods market pricing production costs are considered by the enterprise only as a limiting factor, below which the sale of this product is economically unprofitable.

Enterprises using market methods consumer-oriented, First of all, in their pricing practice they are focused on the current level of demand for the product, on the elasticity of demand, as well as on the consumer’s value perception of their products.

From the standpoint of economic science, value is defined as the total savings or satisfaction received by the buyer as a result of consuming the good he purchased, i.e. the benefit that this good brings to him.

In marketing, perceived value refers to the assessment of the desirability of a good, which in monetary terms exceeds the value of this good. In this case, the measurement is based on the ratio of utility and price of goods that are actually available to the buyer among alternative options.

Pricing methods based on the perceived value of a product are based on the magnitude of the economic effect received by the consumer during the use of the product. This subgroup includes:

• 1. A method for calculating the economic value of a product, the price calculation procedure of which consists of the following steps:
  • · determination of the price (or costs) associated with the use of that good (product or technology) that the buyer is inclined to consider as the best of the alternatives actually available to him;
  • · determination of all the parameters that distinguish your product, both for the better and for the worse, from an alternative product;
  • · assessing the value for the buyer of differences in the parameters of your product and an alternative product;
  • · summing up the price of indifference and estimates of the positive and negative value of the differences between your product and an alternative product.
• 2. Method for assessing the maximum acceptable price. This approach is particularly useful for setting prices for industrial goods where the primary benefit to the buyer is cost savings. The maximum price is understood as the price corresponding to zero cost savings, i.e. The higher the price rises relative to a given level, the stronger the buyer’s rejection will be.

The procedure for determining the price using the maximum acceptable price assessment method comes down to the following calculations:

• · determination of the totality of applications and conditions of use of the product;
• · identification of non-price advantages of the product for the buyer;
• · identification of all non-price costs of the buyer when using the product;
• · establishing the level of “dignity-cost” balance.

When choosing a pricing method, an enterprise can also focus on the current level of demand for the product. Subgroup demand-driven methods can be divided into:

1. Limit analysis method.

This method is most often used by companies leading or starting their economic activity in an imperfect, immature market. In this market, goods usually show a demand curve that slopes downward to the right, which means they have high price elasticity, i.e. when the demand for goods reacts sensitively to changes in price: when it increases, sales volume decreases, and when it decreases, on the contrary, it increases. In this case, selling firms try to determine the price in the area of ​​the coincidence point marginal income and expenses, i.e. at a level that ensures the achievement of maximum high profits, finding the sales volumes corresponding to this point and determining the price for a given time.

As shown in the graph below (Fig. 1), if a firm increases its sales by a certain amount, it receives an increase in marginal profit (MR) as additional income, corresponding to this increase. But at the same time, the occurrence of marginal costs (MC), which are additional costs, cannot be avoided.

Rice. 1.

Consequently, in that part of the graph where the MR straight line goes above the MC curve, there is a direct relationship between profit growth and sales growth. However, if the ratios MR and MC are opposite, then, on the contrary, the profit is eaten up, so the point of intersection of these Q curves becomes the point that ensures maximum profit. Thus, the selling price for the corresponding goods and services should be sought in the area of ​​the marginal profit line MR and the marginal cost curve MC; we lower the vertical line down to the x-axis.

In this case, the cost per unit of production will correspond to the length of the segment MQ, if it is extended upward to the point P 0 - the intersection with the average cost curve AC. Then the segment MP 0 means a sales price that barely covers costs and does not provide a profit. If, with active demand in the market, it turns out to be possible to determine a price above P 0, for example at point P, which is the point of intersection of the demand curve and this straight line MQ, then it will be possible to increase profit by a given amount. Therefore, point P is the price for the company that gives the highest profit.

In conditions of a market of imperfect competition and a market of pure competition, it is necessary to clearly develop a concept: is this price acceptable or not, since in such conditions market prices are decisive. Therefore, if the price for the corresponding goods and services is higher than the level of MP 0, then this company will have price competitiveness. As a result of this, the company can apply preventive competition through price reduction: the market price will infinitely approach the level of MP 0, and firms that, from the point of view of production costs, consider it impossible to work at such a market price, will be forced to leave the market. However, at the same time, it turns out to be possible to actively introduce firms with high innovative power into new markets, which consider it possible for themselves to work at such a relatively low price, and therefore there is a shift in market prices towards their higher prices. low level.

However, determining price based on marginal analysis is appropriate if the company is based on the premise of achieving maximum profit. But even then, the following conditions must be met:

• The firm must be able to accurately calculate both constants and variable costs;
• · it must have conditions that allow it to accurately predict and graphically depict the demand curve;
• · demand in the market should be influenced by changes only/or mainly in prices, and sales volume should show the corresponding price level.

In fact, it is difficult to clearly define the level of costs and differentiate them into fixed and variable costs. In addition, market demand is influenced not only by prices, but also by numerous other factors included in the so-called complex marketing activities, as well as competitive relations between firms. For this reason in real life This method of determining the price based on an analysis of the limits largely helps to give only some guideline for its estimated level.

2. Method of analyzing the peak of losses and profits.

This method allows you to find the production volume and sales volume corresponding to the situation when the total amount of profits and the total amount of costs are equal. Moreover, this method is used when the company’s goal is to determine the price that makes it possible to obtain maximum profit.

Based on the graph shown in Figure 2, the greatest distance between TC (total cost line) and DD" (demand curve) can be taken as the most acceptable price.

Rice. 2.

This method allows you to determine a number of possible prices as a result of their comparison with direct total costs, which is constructed from proposals based on these several price options, and the required price is found that allows you to obtain maximum profit. In fact, we build graphs from TR 1 to TR 5 (direct total revenues) and, through comparison with the direct total costs of the vehicle, consisting of fixed costs FC and variable costs, we select the price that allows us to obtain maximum profit.

In this case, the intersection points of the straight line TC, showing total costs, and straight lines TR 1 - TR 4, showing total profit, determine the price value at which profit is equal to zero. Therefore, they determine the sales volume (B1P1 - B4P4) up to the peak point of losses and profits when selling at each of these prices. It is clear that if the price is set relatively high, then you can quickly reach the peak point of profit and loss, but the total volume of sales of the product in physical terms will not increase. In the case of straight TR 5, physical sales will increase because prices are low, but this straight line will not be able to cross the total cost line due to its low level of profitability and therefore will not be able to reach the peak point of losses and profits. Consequently, if prices are set too high or too low, it can be difficult to improve results entrepreneurial activity to the extent that we would like it.

Therefore, we find those values ​​for which sales are possible at different prices, and draw a graph with the conditional assumption that we will get points D1 - D5. Since these points indicate the degree of acceptance by prospective buyers of each of the proposed prices, they can be taken to represent the demand curve for the corresponding goods and services. If this demand line is located above the line of total costs of the vehicle, this means that a profit corresponding to this excess portion will be received. And if we find the TR line, which is farthest from the TC line, and determine the selling price for the point of intersection of it with the demand line, then it will be possible to obtain a price that would give the greatest profit and the highest level of sales.

However, the use of this method makes sense only if the demand for the corresponding goods and services changes depending on changes in prices and if it is possible to stably construct a straight line of total costs, being able to clearly distinguish between their constant and variable components.

Further, on this graph one can easily construct a demand curve connecting points D1 - D5, which show the volume of sales relative to each expected price, so it is also easy to construct a line of total profit showing its maximum level. However, in the case when, with an increase or decrease in prices, the sales volume is relatively stable and the graph is constructed in the form of an almost straight line decreasing to the right, there is a great danger that from the graph it will not only be impossible to determine the maximum level of profit at the corresponding price, but also in general this whole process of determining the selling price may become meaningless, since it turns out that the next price after the highest, although it will be impossible to sell the product at it, will be the price that will give the maximum profit.

By constructing various TR lines and drawing a demand curve for sales volumes depending on different prices, we seem to be trying to sell the same product or service at different prices, so that later we can check in practice how much we actually managed to sell. However, it is highly doubtful whether in reality there will be a situation where the same product is sold to customers at different prices. Therefore, it is necessary to be careful in determining the point corresponding to the price at which, by selling, one can achieve maximum profits.

Competition-oriented price calculation methods, also belonging to the group of market methods, set prices for goods and services through analysis and comparison of the strength of differentiation of the goods of a given company with competing firms in a particular market. In this case, the current price level is taken into account. Thus, the competition-oriented price determination method consists of determining the price taking into account the competitive situation and the competitive position of a given company in the market. Methods of setting prices with a focus on competitors can be divided into:

1. Method of following market prices.

Every salesman selling this product on the market or offering the corresponding service, sets prices, respecting pricing customs and the price level established in the market, based on the actually existing level of market prices and without significantly violating it. If a given firm increases the differentiation of its goods and services in relation to the goods and services of competing firms, then it has the right to set prices at a slightly higher level than usual. For this reason, such a traditional method of determining prices as the method of following the usual price level is used, as a rule, if goods are difficult to differentiate on the market, for example: cement, sugar, vehicle inspection.

The price set in this way must be determined in a special price zone by each company independently. If an agreement is concluded between firms to agree on price levels within a special framework, this may be considered a violation of antitrust law.

2. The method of following the prices of the leading firm in the market means that the firm secretly determines its prices based on the price level of the leading firm, which has the largest market share, that is, occupying a leading position in the industry in terms of scale of production and sales, level of technology, prestige, sales power, etc. Thus, the firm that occupies a leading position in the relevant market, since it has the highest degree of trust among prospective buyers, is in an advantageous position to exercise its leadership in the field of production costs and dictate the price level. It has ample opportunities to set prices in the market at a level more favorable to itself than others, and can quite freely determine prices taking into account the competitive situation.

Typically, companies that follow the leader in the formation of their pricing policy are very weak both in terms of the degree of fame and the degree of recognition by customers of their trademark. Therefore, they have no choice but to keep prices for their products at the price level set by the leading company. As a result, although firms do not enter into any agreement on prices among themselves, in practice it turns out that goods or services are sold to them at prices that are at a certain, seemingly agreed level, i.e., averaging of market prices occurs.

In reality, no single price is set, but several price levels are determined depending on the position of a given firm in the market, its ability and the degree of differentiation of goods or services in relation to the goods and services of the leading firm. In most cases, there is a situation where the prices of each company are limited to certain limits and are not higher than the corresponding prices of the leading company.

3. A method for determining prices based on the usual prices accepted in the practice of a given market.

Fixed prices are prices that remain at an established and customary level for certain goods for a long period of time over a fairly wide market space. The peculiarity of such prices is the following: no matter how small or large market share occupied by a given company in the market, even with a slight increase in price, there is a sharp reduction in sales of the corresponding goods and services, and vice versa, with a slight decrease in price, a sharp increase in sales can be expected. This area of ​​pricing is very difficult to implement a policy of increasing prices, since a certain price level that has become familiar to buyers and sellers remains for a long time.

Of course, this situation does not exclude a situation that creates the possibility of raising prices. This is usually observed in cases where, for one reason or another, there is a widespread belief among buyers or sellers that the usual prices can be canceled or changed. As concrete example Such pricing can be used for such goods as chewing gum, chocolate, juice.

As a rule, in order to destroy the usual prices and increase them, a radical improvement is undertaken in the quality of the product, its functional properties, packaging, style, design, value, i.e. it is given greater attractiveness and thus adapts it to the target market of predicted buyers, ensuring thereby a new place for the product on the market. Without this, it is impossible to successfully change the usual price.

4. The method for determining prestigious prices is essentially very similar to the regular price method, which was described above. Examples of this type of product include jewelry, passenger cars, mink coats, black caviar, services of luxury restaurants, hotels, etc. These products and services have specific characteristics of luxury level of quality and a huge demonstration effect. If such products are sold at lower prices and every consumer can purchase them, i.e. they become easily accessible, then these products will lose their main product value and attractiveness to the target market of prestigious buyers. Therefore, it is not possible to sell them at low prices.

In this regard, you can expect a fairly significant increase in sales if you sell prestigious goods at high prices, but slightly below the level prevailing in the market. If such goods are sold at significantly reduced prices, then, on the contrary, this situation may raise doubts among the buyer regarding the quality of this product: is it a fake? In addition, the effect of exclusivity and special inaccessibility of the product will be lost, so sales dynamics will show a tendency towards a significant decrease. Therefore, for such products, it is recommended to set prices higher from the very beginning, since this will serve as a strong incentive for buyers, who rely heavily on the high demonstration effect of the purchased product, and will cause an even higher level of sales. So, in order to win with such goods target market, it is very effective from the very beginning of their entry into the market to use a policy of high prices and maintaining an ultra-high-class image in relation to the goods sold.

Prestigious pricing, as one of its varieties, also means setting prices for goods sold at a high level in comparison with the goods of competing companies, using the prestige of the brand and the high image of the company.

5. The adversarial method of determining prices (tender method) is used mainly in various auctions (wholesale markets, exchanges securities etc.).

The pricing method at auction assumes a situation where a large number of buyers seek to buy a product from one limited, small number of sellers, or vice versa, when a large number of sellers seek to sell a product to one or a limited, small number of buyers, and the price of the product is determined at one time and in presence of both parties. In this case, the price that the buyer or seller considers acceptable is written down on a piece of paper, sealed in an envelope, then all the envelopes are collected and opened in the presence of those participating in this kind of auction. If the auction was organized by sellers and the competition is between buyers, then the buyer who wrote the highest price wins; If the auction is conducted by buyers and the competition is between sellers, then the seller who sets the lowest price wins.

The auction method of determining prices is also actively used in commodity markets and securities markets, in turn divided into two types:

• · raising method conducting an auction, when the lowest price is first called, and then it increases, and in the end the goods go to the one who named the highest price;
• · downward, or Dutch, method conducting an auction, when the highest price is called first and if a buyer is not found at that price, then the price is reduced. In this case, the right to conclude a purchase and sale transaction for this product is obtained by the buyer who first accepts the seller’s price and thereby agrees to the highest price compared to other participants in the auction. This method makes it possible to conduct an auction more quickly. However, given the situation and the competitive atmosphere of trading, it can be difficult to expect that you will be able to negotiate the most acceptable price for yourself.

In conditions of strong competition, the company's response to changes in competitors' prices must be prompt. For these purposes, the company must have a program prepared in advance that promotes the adoption of a counterstrategy in relation to the pricing situation created by a competitor.

There is a whole system of methods for determining prices. Firms view price as a variable and important factor, so they are very careful when setting it. When choosing a price determination method, the following considerations are usually taken into account: If you set the price too high, demand will be limited. If you set the price too low, there will be little or no profit. The possible price is determined by the cost of production, the prices of competing and substitute goods, and the unique advantages of the product compared to other goods. The maximum price is determined by the unique advantages of the product, the minimum by production costs, the average by competition.

The system of pricing methods includes the following methods:

• * based on production costs;
• * orientation towards the value of the product;
• * focus on competition;
• * based on finding a balance between production costs and market conditions;
• * parametric methods; method of statistical games.

Determining prices based on production costs

The essence of this method of calculating prices is as follows: the manufacturer of the product determines production costs and adds to them the desired amount of profit, which he considers as a reward for the invested capital. Wholesalers and retailers, when determining their prices, base their prices on the costs associated with the acquisition of goods (wholesalers - from the manufacturer, retailers - from wholesalers or directly from the manufacturer), and markups (wholesale, retail), which are set by sellers at their discretion (unless, of course, markups are regulated by the state) and must ensure that the costs associated with their activities and obtaining the desired profit are covered. The size of markups depends on many factors: the nature of the product, the size of its sales, the position of sellers in the market, the prevailing markups in the market, the desires of sellers, and government intervention in pricing.

Determination of prices based on production costs is carried out on the basis of total and variable costs. When calculating prices based on full production costs, both variable and fixed costs are taken into account. When calculating prices based on variable costs, fixed costs are not taken into account. Profit in this case is added to variable costs.

Let us recall that variable costs are costs that are directly related to the manufacture of a product (their total amount directly depends on changes in production volume), but which practically do not change per unit of product. Fixed costs under existing production conditions do not depend on production volumes. It is very difficult to correctly calculate the amount of production costs and divide them into variable and fixed. At the same time, this is very important for making decisions on price levels, analyzing the profitability of the enterprise, and making other decisions by the company.

The cost-based pricing method involves determining prices based on a break-even schedule. In this case, the company takes into account market factors: current market prices for similar products, possible production and sales volumes at different prices. The firm is looking for a price and corresponding volume of production that would ensure that it receives the target (desired) amount of profit. Cost-based pricing also includes a method of setting prices in accordance with the “absorption curve”. The company turns to this method in cases where it decides to reduce the current price. In this case, price reductions follow a reduction in costs. The firm makes either selective price reductions in order to expand the market, or sharp price reductions if there is a threat of competition or if cost recovery will be guaranteed by rapid growth in sales volume.

The method of justifying prices based on production costs has the following disadvantages.

• * The price may be higher or lower than the price that buyers are willing to pay for a given product, since the factors of demand for the product are not taken into account when justifying the price.
• * Manufacturers ignore the fact that the price may not be directly dependent on production costs, which may be changed in order to satisfy the market.
• * Manufacturers often build prices not on the basis of variables, but on the basis of total production costs, not on the basis of expected, but on the basis running costs. Building prices based on variable production costs allows producers to expand sales volumes (due to a lower price level). Using expected costs instead of current costs is legal not only during inflation, but also when entering the market with a new product. When entering a wide market with a new product, as a rule, hidden costs are revealed, which do not manifest themselves during the sale of a trial batch. Building prices based on running costs may put the manufacturer in a difficult position.
• * Manufacturers ignore the issue of market segmentation and buyer attitudes towards price.
• * When pricing based on production costs, manufacturers are not very interested in developing new products, citing the need to reimburse the costs of research and development and bringing the product to market at the initial stage.
• * Manufacturers do not use price as an effective commercial tool and thereby limit their freedom of action.
• * The method of justifying prices based on production costs is more suitable for determining the lower price limit (which should answer the question: can or cannot enter the market with a new product, stop or continue the production of an old product) than for determining the selling price.

Setting prices based on production costs is considered by many economists to be an outdated and ineffective pricing strategy, although often practiced.

The cost-based pricing method is used by monopolies, large oligopolies, and small sellers.

The popularity of the cost-based pricing method is due to a number of reasons. This method is simple. Information about production costs is more readily available than information about demand. It is believed that if all firms in the industry use this method of determining prices, then their prices will be similar, and in this case price competition is minimized. In addition, many consider the average cost plus profit method of calculating prices to be fairer to both buyers and sellers. When demand is high, sellers do not profit at the expense of buyers, and at the same time it is possible to receive a fair rate of return on the invested capital.

Determining prices based on the value of the product

This method of determining prices is based on the consumer-perceived value of the product and the buyer’s desire to pay a certain amount for this value. The price in this case should correspond to the perceived value of the product by the consumer. A firm can set a high price for its product when the product is of great value to the buyer and when he is willing to pay for it above the normal market price. As the perceived value of a product decreases, the price decreases. In both cases, production costs may be the same. With this approach to determining prices, production costs are considered only as a limiting factor that shows whether the product at the price calculated by this method can bring the profit planned by the company or not.

The value calculated by the method under consideration is based on the subjective assessment by buyers of the value of the product for them. This assessment depends on many parameters, for example, on the return received by the consumer from using the product, on the psychological benefits, on the level of after-sales service, etc.

To determine the price of its product, a company needs to identify what value ideas customers have about competing products. This can be done based on a customer survey. But you can do the following. It is necessary to determine the existing relationship between prices and consumer properties, but similar to goods available on the market, to identify how much the company’s product is better or worse than these goods, and based on the obtained relationships, set the price for your product. Such actions of a company seeking a price for its product reflect the logic of consumer behavior.

Profits are very price sensitive, so making a final price decision based solely on a survey is dangerous for the firm. Surveys cannot replace a serious analysis of product properties and market situations. But this does not mean that there is no need to contact consumers to determine their opinion about the product and how much they are willing to pay for it. Large firms collect such information and use it to determine broad price targets.

The method of determining price based on the consumer's perceived value of a product can be successfully used when there are interchangeable goods on the market, which allows the buyer to compare products and choose those that best meet their desires.

The presence of a wide range of interchangeable goods on the market depends largely on the ability of firms to differentiate their products, that is, to give the same type of product different properties that correspond to the desires of consumers and bring them tangible benefits. Product differentiation can be carried out on the basis technical properties, packaging, design, taste, etc.

Closely related to product differentiation is the issue of market differentiation. Market differentiation is based on the proposition that the company does not work with a homogeneous market of buyers who are looking for the same product with the same properties, but with several of its segments, each of which evaluates the individual consumer properties of the product differently. When there are differentiated products, firms use a range of prices rather than a single price.

Competition-oriented pricing

The company, when focusing on this method of determining prices, proceeds exclusively from the level current prices competing goods and pays less attention to its own production costs and demand. It sets the price for its product a little higher, or a little lower, or at the price level of its main competitors. The pricing logic here is as follows: my closest competitor sells onions for 4 rubles. for 1 kg, my onion is the same, so I will evaluate my products the same way and set a price of 4 rubles. for 1 kg. If a company’s onion differs in terms of quality from a competitor’s product, then it will set a price a little higher or a little lower. This pricing method is used by firms whose products belong to a purely competitive market (with some assumption many agricultural products can be included here) or to an oligopolistic market (steel, aluminum, paper, cars, computers, etc.).

TO this method pricing is applied by those firms that find it difficult to accurately determine production costs per unit of output and consider the average prices formed in the industry to be a good basis for determining prices for their goods. By relying on this method, the company gets rid of the risk associated with setting its own price, which the market may not accept.

With this approach to pricing, a firm typically does not change its prices due to changes in its production costs or demand.

It maintains its prices while its competitors maintain their prices. When competitors change prices, the firm also changes its prices, although its own costs of production and level of demand remain unchanged.

In an oligopolistic market, which involves the presence of several large firms, the leader in setting prices is one or two firms. Other sellers follow them when it comes to price.

Leadership in setting prices is most likely if:

• * the market is offered a unique, new or modified product;
• * market conditions change quickly; the products have reached the maturity stage;
• * production costs have changed significantly;
• * there are opportunities to attract new customers.

Pricing based on competition includes the “sealed envelope” method, or tender pricing. This method is used in cases where several firms compete with each other for a contract. This most often happens when firms participate in tenders announced by the government.

A tender is a written statement of a price by a firm, which it determines based primarily on the prices that it believes competitors will charge, rather than on the value of its production costs or the level of demand for the product. The company's goal is to obtain an order, so its price should be lower than the prices offered by competitors. If a company finds it difficult to determine competitors' prices, it proceeds in this case from information about their production costs. Sometimes a firm offers a price below its costs in order to increase the likelihood of receiving an order.

The prices offered by firms are in sealed envelopes, which are opened at the auction. The order will be received by the company whose price is lower than all the others.

Determining prices based on finding a balance between production costs and market conditions

This method consists of several stages.

First stage. Setting pricing goals. The company must formulate for itself the goal that it wants to achieve with the help of this product and its price in a short and long-term periods. The clearer the goal, the easier it is to determine the price. Based on the goal set, the price is calculated.

Second stage. Determining the initial project of product sales volume. The sales volume of a product is determined based on the production capacity of the company and the market capacity (which is determined based on market research).

Third stage. Calculation of the initial price based on production costs. The company calculates the total costs associated with the production and sale of the volume of products adopted at the previous stage. Total costs are divided into variable and fixed. Costs and unit prices are then calculated.

Fourth stage. Studying various (possible in the real market) sales volumes of goods and/or choosing the optimal one. Taking into account the price elasticity of demand from all possible options Based on the volume of sales of goods and prices for them, the combination of “price-sales volume” is selected that ensures the company receives the greatest marginal profit. Marginal profit equals profit plus fixed costs or the difference between total revenue and variable costs.

Fifth stage. Assessing the position of a product on the market. Based on a comparison of technical and economic parameters, the company identifies the advantages and disadvantages of its product compared to competing products. Here it is determined how the price level, calculated on the basis of costs (see stage 3), fits into the system of current market prices for similar competing goods.

Sixth stage. Elaboration of various options “price-sales volume”, taking into account competitive factors identified at the 5th stage. Based on various options “price-sales volume”, developed taking into account the information obtained at the 5th stage, the company selects the option that ensures it receives the maximum possible marginal profit. Quantitative analysis is necessarily complemented by qualitative analysis.

Seventh stage. Taking into account additional factors when setting the final price. There are a number of considerations that need to be taken into account when deciding on the final price level. We must remember that buyers consider price as an indicator of quality, and that each buyer is within a “price limit” determined by him. It is necessary to provide for the reaction of sellers (wholesale, retail) and competitors to the expected price level. It is necessary to take into account the requirements of state legislation in the field of pricing, take into account inflation if it is significant; see what the advertisement will be like; whether the firm will operate in one or more market segments.

Pricing methods are used within pricing strategy and allow you to narrow down your search for the most reasonable price. There are cost-based pricing methods, marketing research, parametric, etc.

Cost-based pricing methods

These include full cost method - to total costs are added to the amount of profit determined through the rate of return

where C is the total cost of production; LGD - rate of return.

The company seeks to set a price that will provide it with the desired amount of profit.

The disadvantages of this method include the fact that the behavior of competitors and the elasticity of demand are not taken into account. Currently used in markets with imperfect competition. A variation of the full cost method, pricing based on return on investment (return on investment method). The price is calculated using the same formula, and the rate of return is based on the cost borrowed funds.

Marketing assessment methods

The essence of such methods is the study of sales markets, the behavior of competitors, assessment of the elasticity of demand depending on price changes, etc. Setting the price level in market conditions consists of finding a price that would represent the optimal balance between what the buyer would like to pay for a given product and the company’s costs in producing it. Therefore, when determining the price, factors related to demand should be mainly taken into account, i.e. to assessing how much the buyer can and wants to pay for the product offered to him. As a rule, an enterprise first of all tries to establish at what price it could sell its goods on the market based on the nature of demand, competition, quality of goods, etc., and then identify its production, commercial and administrative costs corresponding to such price and changing depending on market conditions.

Let's consider pricing methods based on marketing research.

Similar price method - the price is determined in accordance with competitors' prices for similar products. When setting prices, the advisor may consider the price level for similar goods and services. You should pay attention to the prices of analogues of the goods sold in stores, supermarkets, wholesale warehouses, discount stores, catalogs for ordering goods by mail and other possible retail outlets. If necessary, you can analyze what materials the analogues are made of and what their quality is. The high price is usually justified by high quality materials, great design, etc. In this case, they assign a high price and give a discount.

Current price method. The use of this method is especially attractive for those companies that want to follow the leader. Under these conditions main task companies - cost control.

This method is used primarily in markets for homogeneous goods, since a company selling homogeneous goods in a highly competitive market has limited ability to influence prices. By setting a price taking into account current price levels, the company is based on the prices of competitors and pays less attention to its own costs or demand. Smaller firms “follow the leader,” changing prices when the market leader changes them, rather than in response to fluctuations in demand for their goods or changes in their own costs.

The pricing method based on the current price level is quite popular in competitive market for homogeneous products, is the result of joint optimal solution enterprises in this industry. In cases where the elasticity of demand is difficult to measure, companies believe that the current price level represents the collective wisdom of the industry, the key to obtaining a fair rate of return. And besides, they feel that sticking to the current price level means maintaining a normal equilibrium within the industry.

In an oligopoly, all companies tend to try to sell their products at the same price.

Method for assessing buyer reaction - Demand-based pricing. The seller finds out and sets the maximum price at which the product will necessarily be sold. The essence of this approach to pricing is that it is necessary to set the price that the buyer is willing to pay for a given product. The main difficulty with demand pricing is that the price must be what the buyer will pay, but it is up to the seller to set it. Thus, with demand pricing, the price is set based on the costs of production and distribution, and rises to the amount that the seller believes the buyer is willing to pay.

Setting prices based on the perceived value of a product. When calculating prices, firms base their perception of the value of their goods on the consumer. To form an idea of ​​the value of a product in the minds of consumers, they use non-price methods of influencing buyers in their marketing mixes. The chain in this case is designed to correspond to the perceived value of the product.

A company using perceived value pricing needs to identify what value perceptions consumers have about competitors' products. For example, a cup of coffee and cake in a cafe will cost much more than in a cafeteria. How much more are consumers willing to pay for the same coffee and pie in different settings? If the seller asks for more than the value of the product recognized by the buyer, the company's sales will be lower than they could be. When too low prices Ah, these products sell well on the market, but bring the company less profit than they could with a price raised to the level of their value in the minds of buyers.

Parametric Methods

When it is necessary to determine prices for new products that do not have complete analogues on the market, it is recommended to use unit price method, based on calculating the basic indicator of the old product and comparing it with a similar indicator of the new product. The formula for calculation using this method is:

where Tsn is the new price; Cb - basic flail; PM, II- - new and basic indicators, respectively. The basic indicator can be one of the main parameters of product quality.

Pricing based on sealed bidding

Competitive pricing is also used in cases where firms compete for contracts during bidding. IN similar situations When setting its price, the company is based on the expected price offers of competitors. She wants to win the contract, and to do this she needs to ask for a price lower than others. However, this price cannot be lower than cost, otherwise the company will cause financial damage to itself.

When choosing a pricing method, you should take into account both internal constraints (costs and profits) and external ones (purchasing power, prices of competitors' goods, etc.). No pricing method will give an exact answer to the question of what the price for a particular product should be. The purpose of applying the methods is to narrow the range of searches for the final price.

Pricing methods and strategies provide direction for searching for prices and allow you to highlight the boundaries within which an acceptable price lies. In this space, narrowed by pricing strategies and methods, the firm determines the final price for a specific product in a specific period of time, taking into account the psychology and possible reaction of consumers, predicting the actions of competitors and the government.

Antonina Nikolaevna Gavrilova Candidate of Economic Sciences, Associate Professor; Department of Finance and Credit, Faculty of Economics, Voronezh State University
© Elitarium – Center for Distance Education

One of the most significant factors determining the efficiency of an enterprise is the pricing policy in commodity markets. Prices provide the company with planned profits, competitiveness of products, and demand for them. Through prices the final commercial purposes, the effectiveness of the activities of all parts of the production and sales structure of the enterprise is determined.

If the price of the product does not include a certain level of profitability, then at each subsequent stage of the capital circuit the enterprise will have less and less in cash, which will ultimately affect both production volumes and financial condition enterprises. At the same time, in a competitive environment, it is sometimes permissible to use unprofitable prices to conquer new markets, displace competing firms and attract new consumers. In order to enter new markets, an enterprise sometimes deliberately reduces revenue from product sales in order to subsequently compensate for losses by reorienting demand for its products.

If the enterprise can influence the cost of production only within very small limits, since the flexibility of the enterprise is limited, as a rule, by the range of prices for raw materials, materials, semi-finished products and labor, as well as internal production reserves to reduce the material intensity of products, then the enterprise’s selling price for its products can be installed within virtually unlimited limits. However, the possibility of setting an unlimited price does not entail the consumer’s obligation to purchase the company’s products at the price set by him. Thus, the pricing strategy of an enterprise is the essence of the solution to the dilemma between high selling prices and large sales volumes. Let's try to consider various options actions of the enterprise to set prices for products sold.

Pricing and price management strategies

Price- the only element of traditional marketing that provides the enterprise with real income. Market price is not an independent variable; its value depends on the value of other elements of marketing, as well as on the level of competition in the market and the general state of the economy. Typically, other elements of marketing also change (for example, by increasing product differentiation to maximize price or, at a minimum, the difference between price and cost).

The main objective of a pricing strategy in a market economy is to obtain maximum profit for the planned sales volume. The pricing strategy should ensure long-term satisfaction of consumer needs through the optimal combination of the internal development strategy of the enterprise and parameters external environment as part of a long-term marketing strategy.

Consequently, when developing a pricing strategy, each enterprise must determine for itself its main goals, such as, for example, maximizing revenue, price, product sales volumes or competitiveness while ensuring a certain profitability.

The pricing strategy structure consists of a pricing strategy and a price management strategy.

Pricing strategy allows you to determine the price level from a marketing perspective and limit prices on separate groups products. Pricing should always be carried out taking into account the range and quality of products, their usefulness, significance and purchasing power of consumers and the prices of competitors. In some cases, prices for substitute products should also be taken into account.

Price management strategy there is a set of measures to maintain conditional prices while actually regulating them in accordance with the diversity and characteristics of demand and competition in the market.

Basic steps in developing a pricing strategy:

1. Price analysis(includes getting answers to the following questions):

• whether price standards have been determined;
• whether the characteristics of the consumer are taken into account;
• is price differentiation justified?
• whether the possible trend in price changes has been taken into account;
• Are pricing standards sufficiently linked to other marketing means?
• whether they allow participation in competition;
• whether flexibility of demand is taken into account when setting prices;
• whether the reaction of competitors to the price of this type of product is taken into account;
• does the price correspond to the image of the product;
• is the stage taken into account when setting the price? life cycle products;
• whether the discount rates are correctly determined;
• is there any provision for price differentiation (by region, consumer category, season, etc.);
• defining the objectives of the pricing strategy.

2. Establishing pricing goals and directions:

• pricing goals - profit, revenue, maintaining prices, countering competition;
• directions of pricing - according to price level, price regulation, discount system.

3. Final decision on pricing strategy.

In each type of market, taking into account the tasks facing the enterprise and the prevailing market conditions, pricing can solve the following problems:

• Ensuring the planned rate of return guaranteeing competitiveness and quick sales of the enterprise’s products. Here you need to be quite careful, as this can lead to the fact that price will no longer play a positive role in marketing.
• Creating a cash reserve: If a company has problems selling its products, cash flow may be more important than profit. This situation is typical today for many enterprises in relation to “real” money. Sometimes the value of existing inventory is such that it is better to sell it at a price equal to or below cost than to store it in a warehouse awaiting changes in market conditions. In some cases, by maintaining low prices, when a firm position in the market has been won, it is possible to restrain the emergence of new competitors (prices are not high enough to cover the costs of organizing new production for newcomers).
• Ensuring a given sales volume, when in order to maintain a long-term position in the market and increase sales volumes, you can sacrifice a share of profit. A situation is considered positive when a product simultaneously has qualitative advantages over competitors' products. In this case, after conquering a certain market share, prices can be slightly increased over time. An extreme form of such a policy is “exclusionary” pricing, when the price of a product is set so low that it leads to the withdrawal of some competitors from the market.
• Gaining prestige: most effective way in cases where the consumer finds it difficult to determine the difference in the quality of competitors' products. The prestigious price should accordingly belong to products that are appropriately advertised and marketed.
• Full utilization of production capacity due to “off-peak” pricing. Effective where there are high “stable” and low “changing” prices, where demand changes with a certain frequency (for example, natural resources, transport, etc.). When demand is low, instead of leaving it unloaded production capacity, without paying back the constant part of the cost, it is necessary to stimulate demand by pricing products higher than the variable component of demand.

The problem of pricing occupies a key place in the system of market relations. After market reforms were carried out in Russia, enterprises mainly use free (market) prices, the value of which is determined by supply and demand. They may change for the same products depending on sales volume or payment terms. As a rule, the greater the sales volume per consumer, the lower the selling price per unit.

Prices can be wholesale (holiday) and retail. Let's consider their composition and structure:

• Enterprise wholesale price includes the full cost of production and the profit of the enterprise. At the enterprise's wholesale prices, the products are sold to other enterprises or trade and sales organizations.
• Industry Wholesale Price includes the wholesale price of the enterprise, value added tax and excise taxes. At the industry wholesale price, products are sold outside the industry. If products are sold through sales organizations and wholesale trading bases, then the wholesale price of industry includes a markup to cover costs and generate profit for these organizations.
• Retail price includes the industry wholesale price and trade margin (discount). If wholesale prices are used primarily in on-farm circulation, then at retail prices goods are sold to the final consumer - the population.

The price level is the most important factor influencing revenue from sales of products and, consequently, the amount of profit.

Of significant importance are also terms of sales. The sooner payment occurs in accordance with concluded agreements, the faster the enterprise is able to involve funds in economic circulation and receive additional benefits, and also reduce the likelihood of non-payments. Therefore, sales at reduced prices subject to prepayment or payment upon shipment often looks preferable for an enterprise than, for example, shipping products at higher prices, but on deferred payment terms.

Pricing Methods

The following stages of the pricing process at the enterprise are distinguished:

• determining the base price, i.e. prices without discounts, surcharges, transport, insurance, service components;
• determining the price taking into account the above components, discounts, markups.

The following basic methods for calculating the base price are used, which can be used in isolation or in various combinations with each other:

1. Full cost method, or cost plus method (Full Cost Pricing, Target Pricing, Cost Plus Pricing). A certain amount corresponding to the rate of profit is added to the total amount of costs (fixed and variable). If production costs are taken as a basis, then the markup should cover sales costs and ensure profit. In any case, the surcharge includes indirect taxes and customs duties passed on to the buyer. It is used in enterprises with clearly defined product differentiation to calculate prices for traditional goods, as well as to set prices for completely new goods that have no price precedents. This method is most effective when calculating prices for goods of reduced competitiveness.

Example. A household goods manufacturing company wants to set a price for a new product. Projected annual production is 10,000 units. Presumably, the direct costs of raw materials and materials per unit of product are 1000 rubles. Direct labor costs per unit of product - 400 rubles. The company plans the amount of fixed costs to be 2000 thousand rubles. per year and hopes to receive 4000 thousand rubles. profit. Calculate the price using the marginal cost method.

1. The planned sales revenue after reimbursement of variable costs will be: 2000 + 4000 = 6000 thousand rubles.
2. The desired result from sales after reimbursement of variable costs per unit of product: 6,000,000 / 10,000 = 600 rubles.
3. Total variable costs per unit of product: 400 + 1000 = 1400 rubles.
4. Price (variable costs per unit of product + desired result from sales after reimbursement of variable costs per unit of product): 600 + 1400 = 2000 rubles.

2. Manufacturing cost method (Conversion Cost Pricing). The full amount of costs for purchased raw materials, supplies, and semi-finished products is increased by a percentage corresponding to the enterprise’s own contribution to increasing the cost of the product. The method is not applicable for long-term pricing decisions; does not replace, but complements the full cost method. It is used in specific conditions and decision-making cases:

• about increasing the mass of profits by increasing production volumes;
• about refusal or continuation of competition;
• about the change assortment policy when determining the most and least profitable products;
• for one-time (individual, non-mass) orders.

3. Marginal cost method (Direct Costing System) involves increasing variable costs per unit of output by a percentage that covers costs and provides a sufficient rate of profit. Provides greater pricing options: full coverage of fixed costs and maximization of profits.

4. ROI method (Return on Investment Pricing) based on the fact that the project must provide profitability not lower than the cost of borrowed funds. The amount of interest on the loan is added to the total cost per unit of production. The only method that takes into account the payment of financial resources necessary for the production and sale of goods. Suitable for businesses with a wide range of products, each of which requires its own variable costs. Suitable for both traditionally produced goods with an established market price, and for new products. It is used successfully when making decisions about the volume of production of a new product for an enterprise.

Example. The company sets the price for a new product. The projected annual production volume is 40,000 units, the estimated variable costs per unit of product are 35 rubles. The total amount of fixed costs is 700,000 rubles. The project will require additional financing (loan) in the amount of 1,000,000 rubles. at 17% per annum. Calculate the price using the return on investment method.

1. Variable costs per unit 35 rub. Fixed costs per unit of product: 700,000 / 40,000 = 17.5 rubles.
2. Total costs per unit of product: 35 + 17.5 = 52.5 rubles.
3. The desired profit will be: (1,000,000 × 0.17) / 40,000 = 4.25 rubles/unit. (not lower).
4. Minimum acceptable price of the product: 35 + 17.5 + 4.25 = 56.75 rubles.

5. Methods of marketing assessments (Pricing based on Market Considerations). The company tries to find out the price at which the buyer definitely takes the product. Prices are focused on increasing the competitiveness of the product, and not on meeting the enterprise’s needs for financial resources to cover costs.

Example. The elasticity of demand from prices for the company's products is 1.75.

1. Determine the consequences of reducing the price by 1 ruble, if before this reduction the sales volume was 10,000 products at a price of 17.5 rubles, and total costs were equal to 100,000 rubles. (including permanent ones - 20 thousand rubles) for the entire production volume.

Sales revenue before price changes: 17.5 × 10,000 = 175,000 rubles.

Profit before price changes: 175,000 - 100,000 = 75,000 rubles.

Sales volume after price reduction: 10,000 × (1.75 × 1/17.5) + 10,000 = 11,000 units.

Sales revenue after price reduction: 16.5 × 11000 = 181500 rub.

Total costs of production and sales of products after price reduction:

• fixed costs: 20,000 rubles;
• variable costs: (100,000 - 20,000)/10,000) × 11,000 = 88,000 rub.
• total costs: 20,000 + 88,000 = 108,000 rubles.

Profit after price reduction: 181500 - 108000 = 73500 rub.

Thus, the price reduction led to a loss of profit in the amount of 1,500 rubles: 75,000 - 73,500 = 1,500 rubles.

2. Determine whether it is beneficial for the company to reduce the price by 1 ruble/unit if the level of fixed costs was 50% of total expenses.

Costs after a price reduction at a new level of fixed costs in the cost structure:

• fixed costs: 100,000 × 0.50 = 50,000 rubles;
• variable costs: (100,000 - 50,000)/10,000) × 11,000 = 55,000 rub.
• total costs: 50,000 + 55,000 = 105,000 rub.

Profit after price reduction: 181,500 - 105,000 = 76,500 rubles.

Thus, reducing the price is beneficial, since it leads to additional profit in the amount of 1,500 rubles: 76,500 - 75,000 = 1,500 rubles.