B Com Exam  >  B Com Notes  >  Cost Accounting  >  PPT - Methods of Pricing

PPT - Methods of Pricing | Cost Accounting - B Com PDF Download

Download, print and study this document offline
Please wait while the PDF view is loading
 Page 1


Methods Of Pricing
1. Value Based Pricing
2. Cost Based Pricing
3. Market/Competitor Based Pricing
4. Customer Demand Based Pricing
Page 2


Methods Of Pricing
1. Value Based Pricing
2. Cost Based Pricing
3. Market/Competitor Based Pricing
4. Customer Demand Based Pricing
1. Value Based Pricing(value optimized 
pricing)
• It is a pricing strategy which sets prices 
primarily, but not exclusively, according to the 
perceived or estimated value of a product or 
service to the customer rather than according 
to the cost of the product or historical prices.
• when products are sold based on emotions 
(fashion), 
• In shortages (e.g. drinks at open air festival on 
a hot summer day) or for complementary
products (e.g. printer cartridges, headsets for 
cell phones)
Page 3


Methods Of Pricing
1. Value Based Pricing
2. Cost Based Pricing
3. Market/Competitor Based Pricing
4. Customer Demand Based Pricing
1. Value Based Pricing(value optimized 
pricing)
• It is a pricing strategy which sets prices 
primarily, but not exclusively, according to the 
perceived or estimated value of a product or 
service to the customer rather than according 
to the cost of the product or historical prices.
• when products are sold based on emotions 
(fashion), 
• In shortages (e.g. drinks at open air festival on 
a hot summer day) or for complementary
products (e.g. printer cartridges, headsets for 
cell phones)
1. Value based Pricing 
• Value-based pricing in its literal sense implies basing 
pricing on the product benefits perceived by the 
customer instead of on the exact cost of developing 
the product. For example, a painting may be priced as 
much more than the price of canvas and paints: the 
price in fact depends a lot on who the painter is. 
Painting prices also reflect factors such as age, cultural 
significance, and, most importantly, how much benefit 
the buyer is deriving. Owning an original Dalí or Picasso
painting elevates the self-esteem of the buyer and 
hence elevates the perceived benefits of ownership
Page 4


Methods Of Pricing
1. Value Based Pricing
2. Cost Based Pricing
3. Market/Competitor Based Pricing
4. Customer Demand Based Pricing
1. Value Based Pricing(value optimized 
pricing)
• It is a pricing strategy which sets prices 
primarily, but not exclusively, according to the 
perceived or estimated value of a product or 
service to the customer rather than according 
to the cost of the product or historical prices.
• when products are sold based on emotions 
(fashion), 
• In shortages (e.g. drinks at open air festival on 
a hot summer day) or for complementary
products (e.g. printer cartridges, headsets for 
cell phones)
1. Value based Pricing 
• Value-based pricing in its literal sense implies basing 
pricing on the product benefits perceived by the 
customer instead of on the exact cost of developing 
the product. For example, a painting may be priced as 
much more than the price of canvas and paints: the 
price in fact depends a lot on who the painter is. 
Painting prices also reflect factors such as age, cultural 
significance, and, most importantly, how much benefit 
the buyer is deriving. Owning an original Dalí or Picasso
painting elevates the self-esteem of the buyer and 
hence elevates the perceived benefits of ownership
Example
• The fashion industry is an example of a sector 
where value-based pricing is common. If a 
particular designer becomes popular, the 
designer can charge more for the goods they 
create than if they were not as popular.
Page 5


Methods Of Pricing
1. Value Based Pricing
2. Cost Based Pricing
3. Market/Competitor Based Pricing
4. Customer Demand Based Pricing
1. Value Based Pricing(value optimized 
pricing)
• It is a pricing strategy which sets prices 
primarily, but not exclusively, according to the 
perceived or estimated value of a product or 
service to the customer rather than according 
to the cost of the product or historical prices.
• when products are sold based on emotions 
(fashion), 
• In shortages (e.g. drinks at open air festival on 
a hot summer day) or for complementary
products (e.g. printer cartridges, headsets for 
cell phones)
1. Value based Pricing 
• Value-based pricing in its literal sense implies basing 
pricing on the product benefits perceived by the 
customer instead of on the exact cost of developing 
the product. For example, a painting may be priced as 
much more than the price of canvas and paints: the 
price in fact depends a lot on who the painter is. 
Painting prices also reflect factors such as age, cultural 
significance, and, most importantly, how much benefit 
the buyer is deriving. Owning an original Dalí or Picasso
painting elevates the self-esteem of the buyer and 
hence elevates the perceived benefits of ownership
Example
• The fashion industry is an example of a sector 
where value-based pricing is common. If a 
particular designer becomes popular, the 
designer can charge more for the goods they 
create than if they were not as popular.
1. Value Based Pricing
• Value > Price > Cost
• Price > Value > Cost
• Price > Cost > Value
• Price = Value > Cost
Read More
106 videos|173 docs|18 tests

FAQs on PPT - Methods of Pricing - Cost Accounting - B Com

1. What are the different methods of pricing in B Com?
Ans. In B Com, there are several methods of pricing that businesses can use. Some common methods include cost-plus pricing, market-based pricing, penetration pricing, skimming pricing, and value-based pricing. Each method has its own advantages and considerations, and businesses must carefully analyze their market, costs, and competitive landscape to determine the most suitable pricing strategy.
2. How does cost-plus pricing work in B Com?
Ans. Cost-plus pricing is a method commonly used in B Com where a business determines the price of a product by adding a markup to the cost of production. The markup is typically a percentage that covers both the cost of production and the desired profit margin. Cost-plus pricing is relatively straightforward and helps businesses ensure they cover their costs and generate a profit. However, it may not account for market demand and may not be competitive if competitors offer similar products at lower prices.
3. What is market-based pricing in B Com?
Ans. Market-based pricing in B Com involves setting the price of a product or service based on the prevailing market conditions and the perceived value of the offering. This pricing method considers factors such as competitor pricing, customer demand, and market trends. By aligning the price with market dynamics, businesses can position their products competitively and optimize revenue. However, market-based pricing requires continuous monitoring of the market and may require adjustments based on changing conditions.
4. When is skimming pricing used in B Com?
Ans. Skimming pricing is a strategy often used in B Com when launching new and innovative products. This method involves initially setting a high price for the product to capitalize on the early adopters and customers willing to pay a premium. Over time, as the market becomes more saturated and competition increases, the price is gradually lowered to attract a broader customer base. Skimming pricing allows businesses to recoup their development and marketing costs quickly but may limit market penetration if the price remains high for an extended period.
5. How does value-based pricing work in B Com?
Ans. Value-based pricing in B Com focuses on setting prices based on the perceived value the product or service provides to customers. This approach recognizes that customers are willing to pay more for offerings that offer unique features, superior quality, or solve specific problems effectively. Value-based pricing requires businesses to understand their target customers' needs and preferences, conduct market research, and effectively communicate the value proposition of their products. By pricing based on value, businesses can capture additional profit margins while delivering enhanced customer satisfaction.
106 videos|173 docs|18 tests
Download as PDF
Explore Courses for B Com exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

Objective type Questions

,

Summary

,

video lectures

,

mock tests for examination

,

Important questions

,

pdf

,

PPT - Methods of Pricing | Cost Accounting - B Com

,

Free

,

PPT - Methods of Pricing | Cost Accounting - B Com

,

Previous Year Questions with Solutions

,

Exam

,

practice quizzes

,

Semester Notes

,

Sample Paper

,

study material

,

shortcuts and tricks

,

ppt

,

PPT - Methods of Pricing | Cost Accounting - B Com

,

Viva Questions

,

past year papers

,

MCQs

,

Extra Questions

;