Gauge Your Prices

Gauge Your Prices

Learning Objective:

4.07 Develop a foundational knowledge of pricing to understand its role in marketing

Learning Target:

Describe pricing concepts associated with the sale of products and services related to cost, value, and pricing objectives

watch video at http://taragentile.com/coffee-pricing/

The value of a product or service

• Value is subjective - means different things to different people

• Value is based on each person's perception of the benefits of purchasing the product or service

Perceived benefits are tangible or intangible

• Tangible benefits: physical characteristics (size, shape, color)

• Intangible benefits: what the product or service allows you to do or feel

Open Ended

If you won tickets to see your favorite team play or your favorite band in concert, what would be some tangible and intangible benefits associated with that prize?

Price = fixed costs + variable costs + intangible benefit

• Fixed costs: expenses that stay the same no matter how much of the product is being produced

• Variable costs: expenses that change along with the amount of

  production.

Open Ended

Can you think of any other costs associated with producing products or offering services? Are they fixed or variable costs?

Sport/Event Pricing - Customer View

• Total Cost = ticket price + associated costs

• Associated costs (gas, parking, food, drinks, programs, and souvenirs etc.)

Open Ended

Think of an experience where you had to consider the “total cost” in attending a game or an event. Where did you go? What did you have to pay for in addition to tickets? Did you feel it was worth it?

When pricing a product/service, you must keep your objective in mind

• Are you just trying to cover costs and make a small profit?

• Are you trying to create a certain image?

• Are you trying to compete?

What are the goals of the good/service?

Open Ended

Think of a product or service that is considered a “luxury” item. What is the item/service? Do you feel the quality is worth the price, or do you think the high price is just a marketing device? Are similar, lower priced products just as good?

Small Group Exercise

Pricing Objective Posters