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In: Business and Management

Submitted By ritukej
Words 956
Pages 4
What Affects Pricing?
Consumer Factors Mfrs., Wholesalers, Suppliers Competition Strategy Variables Govt. Factors – FTC
• Target audience • Profits

Retail Pricing Strategies

• Supply/Demand • Price Elasticity of Demand
Sensitivity of buyers to price changes

Pricing Strategies
Demand-oriented Cost-oriented Competition-oriented

Estimate how much customers will buy at various price levels
• Set prices to achieve sales goals

Determine prices acceptable to target market
• Demand ceiling • Demand floor

Psychological Pricing
• Price/quality relationship • Odd pricing

Zone Pricing: “Refining companies actually map out areas and charge dealers different wholesale prices based on secret formulas that often factor in location, the area’s affluence or simply what the market will bear.”

Takes into account the cost of merchandise, retail operating expenses, and desired profits Markup covers operating expenses and profits
$1.20 1.35

Wholesale Prices: Ct.: Berlin Greenwich NY: Albany NYC $0.95 1.01 $0.98 1.12 Palo Alto

Northern CA: Pleasanton

• Markup = Selling price (retail price) – Cost of Goods

Entrée Economics
Pinot Bistro, Los Angeles

300% solution: Many independently owned restaurants aim for an overall food markup of 300% or 4X the cost of the raw ingredients But, you might see a 500% markup on a grilled vegetable plate (and pay $9) and only a 200% markup on a tenderloin meal (and pay $25)

Grilled Pork Chop with white beans, pancetta, escarole, and assorted olives Total Cost to Restaurant: $5.67 Menu Price: $19.95

Le Francais, Wheeling, Illinois Trio of Lamb (mustard-crusted rack, cumin-dusted loin and braised shoulder with their own jus) Total Cost to Restaurant: $16.81 Menu Price: $32.50

Pinot Bistro, Los Angeles Persimmon Salad with grilled radicchio, crisp cress, and a red...

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