Transcript Pricing – Q&A - Hingham Schools

Pricing Strategy
Understanding Consumer Value
 How much would you be willing to spend for:
– Your high school yearbook as a senior
– Your ticket to the junior or senior prom
 We each place different value (and willing to
pay different price) for the same product
 “The key to pricing is “understanding the
value that buyers place on a product or
service” (often done through market
research)
Shirt Example
 You made T-shirts for Girls Lax and cost you
$4/shirt
 You sell each shirt for $10/shirt?
 The margin or profit: $6/shirt
 Price markup is 150% (10-4)/4=150%
 Would lowering the selling price to $7 sell
more shirts and/or increase profits?
Pricing Factors
 Supply and Demand
– When was the last time you clearly overpaid for
a product? Why?
– Peak and off-peak rates
 Costs
– To ensure a profit
 Competition
– Evaluate Verizon vs. Comcast
 Combination of the three above
Market Share
 Market Share is the percentage of the total
sales volume generated by all competitors in
a given market.
 Brand Sneaker Preference for class
– Nike, Reebok, Others?
– Nike has ?% market share (market is the class)
Tickets
 Brockton Rox tickets are $6. They don’t offer
discount tickets. Why?
Substitutes – Brand Loyalty
 There are lots of products with available
substitutes (cereals, detergents, etc.)
 Name a product where you would NOT
accept a substitute?
Psychological Pricing
 Odd/even pricing: suggests bargains
 Prestige pricing: suggests exclusiveness
 Multi-unit pricing: suggests a bargain by pricing
items in multiples (1 for $.33 or 3 for $.99)
 Bundle pricing: All inclusive trip, Verizon
 Promotional pricing: holidays, rebates
 Discount pricing: based on quantity, seasonal
items, terms (cash or paying by certain date)
Luxury vs. Necessity
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Gym membership
Cell phone
Cold medicine when you’re sick
Gas for your car
Urgency of Purchase
 When was the last time you bought
something because of a time restriction?
 HHS tickets going on sale – more at door?
 Gas when your car was on empty
 Infomercial with time winding down
Price wars
 Airline tickets, gasoline, computers
 How much does price factoring in the three
products named above?
 Is anyone loyal to an airline based on
frequent flyer miles (price & promotional tie
in)?