Approaches to Pricing | Cost Based Pricing | Dynamic Pricing and Others (Marketing video 62)

Approaches to Pricing refer to the best methods that will help in determining the price of a product or a service.

Pricing is an important part of the marketing process and the right Approaches to Pricing can help an organization in improving sales figures and generating more revenues

Types of Pricing

1. Cost-based Pricing

Cost-based Pricing refers to a process of setting the price by adding marginal profit to the production, distribution, and manufacturing cost for a unit of the product. It includes

- Variable Cost
- Fixed Costs
- Economic Costs and Gains

Example – The automobile industry

2. Dynamic Pricing

Dynamic Pricing is a strategy where the product price keeps changing based on the changing demand and supply in the market. It is used by the retail, tourism, entertainment and hospitality industries.

Examples – Uber, Disney

3. Competitors' Pricing

Competitors pricing is strategic pricing where prices of similar products are set relative to the competition. It is mostly used by companies dealing in soft drinks, paper, steel, gold etc.

Example – Pepsi vs Coke

4. Auction Type Pricing

Auction Type Pricing is the process of setting the price by putting the product out for a bid and auctioning it to the highest bidder. It is popular in the e-commerce industry.

Example – eBay

Three types of Auction Type Pricing

Ascending Bids

Ascending Bids occur when bidders continue to outbid each other by increasing the prices continuously.

Descending Bids

In Descending Bids the initial bidding price is high and it gradually decreases until one bidder is ready to pay the quoted price.

Sealed Bids

Sealed Bids refer to the written bid which is placed in a sealed envelope and is opened at a specific time with all other bids. The highest bidder wins the bidding process.

Value Pricing

Value Pricing refers to customer-focused pricing where a company sets the price based on how much the customer believes its worth.

Example – One Plus Phones

This video is on the different types of Pricing and different pricing approaches and it has the following sub-topics.

Time Stamps
0:00 Introduction to Approaches to Pricing
00:25 Cost-based Pricing
01:16 Dynamic Pricing
02:45 Competitors Pricing
03:22 Auction Type Pricing
03:51 Ascending Bids
04:03 Descending Bids
04:21 Sealed Bids
04:35 Value Pricing