Pricing and Costing Methods Presentation PDF

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES Pricing and Costing What is Price? Price is the amount or compensation paid by the customer for the product and service which is using or which is buying. What is Cost? Cost is the amount of value incurred to produce the product or a service. Con...

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES Pricing and Costing What is Price? Price is the amount or compensation paid by the customer for the product and service which is using or which is buying. What is Cost? Cost is the amount of value incurred to produce the product or a service. Conclusion : Price is the price amount paid by the customer to purchase the product and the cost is the amount incurred to produce the product or Pricing and Costing Relationship of the Price vs the Cost Price – Cost = Profit Example 1 : Price of the Cellphone Php 20,000 Cost 15,000 Profit 5,000 Example 2 : Price of the Cellphone Php 15,000 Cost 18,000 Net Loss ( 3,000) Pricing and Costing Costing Methods Pricing Strategy Unit Costing Premium Pricing Job Costing Penetrating Pricing Contract Costing Economy Pricing Process Costing Skimming Pricing Service Costing Psychological Pricing Composite Costing Bundle Pricing Batch Costing Premium Pricing Predatory Pricing Dynamic Pricing Costing Methods Unit Costing – this is also known as Single Costing/ The units produced is identical - Costing is done per unit produce - Costing Methods Job Costing – this is adopted in the industry where there is no standard product, basically this is defined per Job Specification. Costing Methods Contact Costing – This is also known as terminal sosting, this is similar to job costing how ever the job is big and its spread over a long period of time. This is based on the specification of the customer Costing Methods Process Costing – This can be defined as continuous costing, the raw materials passed through a different process before it can have a final output or product/final shape. The finished product became the raw materials of the next process and so on. Costing Methods Service Costing – This type of industry is used by the service industry such as hotels, hospitals, transport, and electricity companies. The production is not producing any tangible goods, or products Costing Methods Composite Costing – Defined where the number of components are manufactured separately ad then assembled in the final product, such as cars, motorcycle and scooters. All the components and parts are created by the process and other costing methods. Costing Methods Batch Costing – It is an extension of Job costing. It is a group of identical products, where each batches has identical unit’s but each batch will be defferent.. Pricing Strategies Premium Pricing – also called as image pricing, the type of the product is higher than the industry standard, this pricing helps us to generate revenues initially when the products is launched. Pricing Strategies Penetration Pricing – price is initially low to gain market share and create a positive word of mouth advertisement, initially there will be losses but will gradually shift customer because of its low price. Initially price is low then eventually price will be high Pricing Strategies Economic Pricing – it is used by the generic food suppliers and discount retailers, it is used to attract price sensitive customers. Pricing Strategies Skimming Pricing – Product is priced high at initial launch; price is reduced in the saturation stage to increase the sales. After some period of time the price was reduced for the tremendous amount of price. Pricing Strategies Psychological Pricing – it is designed to trigger emotional response, a pricing tactic that is design to appeal to the customer who use emotional response rather than rational response to pricing message. Customer is looking for value, it is also called as charm pricing. Pricing Strategies Bundle Pricing – this pricing involved selling in packages, or set of product in a lower prices even in selling at a for discounted price, it will increase profit it promote purchase of one product. Pricing Strategies Premium Pricing – It is an internet pricing strategy; basic features are free advanced are priced free of cost. You need to pay for the price if you need more life in the play. Pricing Strategies Predatory Pricing – product is price below cost price to eliminate the competition. It is a pricing strategy wherein the product purpose is to eliminate competition. This strategy is illegal in most of the countries. Because it get most of the market share. Pricing Strategies Dynamic Pricing – it is also called as demand pricing, it charges different price for the same product for different users depending on the ability to pay on the services. Thank you and God bless everyone!!!!