To most of history, prices were set through negotiations between buyers and sellers. Sellers would ask for a higher price than they expected to receive, and buyers would offer a less then they expected to pay. Through bargain in, they would arrive at an acceptable price. Setting one price for all buyers is a relatively modern idea. Yet many modern companies do not handle pricing well. The most common mistakes are, pricing is to cost oriented, price is not adjusted off enough to meet market changes, and price is not varied enough for different product items and market segments. In modern companies pricing is handled in varies ways. In small companies, prices often set by top management rather than by the marketing or sales department. In large companies, prices are typically set by production managers or by certain divisions. More often, top management sets the general pricing objectives and policies and then the proved the prices propose by lower levels of management. In industries such as airlines, railroads, oil companies, etc. where pricing is a key factor. Companies were often established a pricing department to set prices. This department reports either of the marketing department or top management. Other people who observe influence on pricing include sales managers, production managers, finance managers, and accountants.
Section B: speaking up
1. Typical dialogue.
1) Background information: In the import and export department, sales representative Chen Xin, and department manager Mr. Al Malcolm, are talking about prices and pricing.
Chen Xin, Mr. Al Malcolm,
2) Practical dialogue
Why different firms have different prices for the same quality products?
Because different firms have different profit expectations there adopts different stratagems.
What are the factors that set a price in techniques? You are an expert in this aspect. Would you please elaborate?
I am not an expert. But there are three basic techniques of pricing export products.
What are they?
Well, the first technique is cost plus pricing, it’s simply means to arrive at a selling price by adding expected profit to the cost of the product. By cost, I mean the total figure of production cost, selling cost, delivery cost, taxes and tariff and some other unknown costs. This is a common way of pricing.
What’s the second technique?
The second one is marginal cost pricing. When a firm has more production capacity then the domestic market can’t absorb. It will export in order to exploit the idle capacity. In this case, the firms can’t spray all the fixed costs over the home sales.
What’s the third technique?
The third technique is break-even pricing. This method determines the quantity of sales at which the exporter’s revenue equals its costs.
2. Typical dialogue
1) Background information: Mr. Xiang Liming, manager of a store, is talking with Mr. Kei Yici, a visiting marketing expert about pricing.
Mr. Xiang Liming, Mr. Kei Yici
2) Practical dialogue:
About what prices to charge from my new items, can you give me some ideas?
Well, there are generally two types of pricing policies, they are price emphasize and price deemphasize. The price emphasize policy emphasizes low prices. Low prices include sales. Low prices though, usually mean no extra services.
Exactly, many people are interested only in the low prices but not in the extra services. In another words, a very low price might mean no credit, on delivery, repair, or no installation services.
Well, there is another we call off-even pricing. For instance, you sell a tape record for 79 dollars 95 cents instead of 80 dollars. Even though it’s actually about the same, the lower price has a favorable psychological effect.
Yes, will you explain the price deemphasize you mentioned just now?
That means you don’t call attention to the price at all. That works with an expensive item with high value. This will immediately approach for your fine juried department, or designer fashions department.
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