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Price Adjustment

By | Jan. 2009
Page 1 of 4
Five (5) price adjustment strategies

Discount and allowance pricing

This is when companies adjust their price to reward customer for certain response. Such as early payment of bills and buy one get one half price or free.

The many form of discount include a cash payment discount, a price reduction to buyers who pay their bills promptly. For examples “2/10 net 30,” this means although payment is due within 30 days, the buyer can deduct 2 percent if the bill is paid within 10 days. Also buyers that purchase large volumes receive a price reduction. Such discounts provide an incentive to customer to buy more from one given seller. Functional discount also called trade discount is offered by seller to trade channels members who perform certain functions, such as selling, storing, and record keeping. A seasonal discount is a price reduction to buyers who buy merchandise or service out of season .for example, lawn an garden equipment manufacture offer seasonal discounts to retailers during the fall and winter months to encourage early ordering in anticipation of the heavy spring and summer selling seasons. Seasonal discounts allow the seller to keep production steady during an entire year.

Allowances are another type of reduction from the list price. For example, a trade-in allowance are price reductions given for turning in an old item when buying a new one “ Cable and Wireless once offer to take in old phones and get the new one for a cheaper price”. Promotional allowances are payments or price reduction to reward dealers for participating in advertising and sales support programs.

Psychological pricing

This is where price say something about the product. For example many consumers use price to judge quality. a school bag may cost $5000 and may only worth $1000 worth of value , but some people are willing to pay the $5000 because the price indicates something special . In using psychological pricing, sellers consider the psychological of prices and...
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