✨ What is Pricing?
Pricing simply means deciding how much to charge for a product or service.
👉 Example:
When you buy a cold drink, the ₹50 you pay is the price.
✨ Why Study Pricing?
-
It brings in money!
Pricing is the only part of marketing that directly generates revenue. (Product, Promotion, Place don't — only Price does!) -
It’s fast and powerful.
A small price change can quickly impact sales and profits. -
It’s hard for competitors to copy.
Other companies can copy your product but not easily copy your pricing strategy.
👉 Example:
Netflix raised subscription prices and still gained more subscribers because of their smart pricing.
✨ What Should We Learn About Pricing?
- How customers see and react to different prices.
- How to set the right price for new and existing products.
- How to adjust prices over a product’s life.
- How to choose the right pricing metrics (e.g., monthly fee, one-time payment).
👉 Example:
Disney introduced different ticket prices depending on the day — weekends were more expensive!
✨ Different Words for Price
Price isn't always called "price." It comes in many forms:
| Label | Example |
|---|---|
| Rent | Paying monthly for an apartment |
| Wage | Pay for hourly work |
| Salary | Monthly payment to an employee |
| Tax | Payment to the government |
| Fee | Doctor's consultation fee |
| Charge | Late payment charge |
| Usage Fee | Toll fee for using a highway |
✨ A Short History of Pricing
| Time | How Pricing Worked |
|---|---|
| Barter System | People exchanged goods (e.g., rice for wheat) |
| Negotiated Prices | Buyers and sellers bargained to agree on a price |
| Posted Prices | Fixed prices were displayed (like today in shops) |
✨ Real-world Pricing Examples
| Company/Industry | What Happened |
|---|---|
| Unilever | Increased product prices because of rising food costs. |
| Indian Oil Companies | Switched to daily fuel price updates, like the US. |
| Vodafone | Offered data and free calls at a special limited-time price. |
| Netflix | Increased prices and saw stock prices go up! |
| Coke | Tested vending machines that charge more when it’s hotter outside. |
| Uber/Ola | Surge pricing allowed up to 4 times normal rates. |
| Samsung | Started a "price war" to win in the premium phone market. |
| Disney | Started demand-based pricing for theme park tickets. |
✨ What We Will Learn About Pricing
- How to build a pricing strategy from start to finish.
- How to set prices for new products entering the market.
- How to adapt prices as products become older.
- How to find the right pricing structure and price levels.
👉 Example:
When Samsung launches a new phone, it sets a high price, and after a few months, lowers the price to attract more buyers.
✨ How to Set Prices
| Step | What to Do | Example |
|---|---|---|
| 1. Examine Costs | Check if the price covers your expenses. | A bakery calculates flour, sugar, rent costs before setting cake prices. |
| 2. Examine Value to Customers | Know what customers are willing to pay. | Customers may pay extra for organic ingredients. |
| 3. Segment Customers | Offer different prices for different groups. | Student discounts, corporate packages, etc. |
| 4. Understand Price Elasticity | Check how price changes affect demand. | If a ₹10 price hike leads to 50% fewer customers, rethink pricing. |
| 5. Set Pricing Objectives | Decide if you want to maximize profit, market share, or loyalty. | Vodafone offered low-price plans to gain more customers. |
🎯 Difference Between Cost-Based Pricing and Value-Based Pricing
| Cost-Based Pricing | Value-Based Pricing |
|---|---|
| Focuses on covering costs plus a profit margin. | Focuses on what the customer is willing to pay. |
| Ignores customer perception. | Matches customer's idea of value. |
| Example: Manufacturing cost ₹100 + ₹20 profit = ₹120 price. | Example: Customers think the product is worth ₹200, so price it at ₹200 even if cost is ₹100. |
