Discount and allowance pricing
Several companies offer discounts and bonuses in their basic price to reward customers for their specific responses. Discounts can take many forms, such as cash discount which give the buyer a discount if paid before the due date of payment. Similarly there is a quantity discount on the purchase of products in large quantities. For example the price of a shirt is $ 5, but if the buyer purchases two shirts, then the price is $ 4 per shirt. Other functional forms off discount (which is given to channel members by the seller to perform certain functions) and the discount season (in which discount is given to buyers to purchase goods off-season).
Companies use segmented pricing to charge different prices to buyers on the basis of differences in customers, products and places. Some of the major forms of price fixing are targeted customer segment, the shape of the product price, location, etc. Low price pricing segment of customers, firms charge different prices to different customers.
For example, students pay less for tickets of the soccer match compared with other citizens. For prices to a product, customers pay differently depending on the different versions. Here we take the example of mobile phones that are priced differently depending on features, but these features only costs a few dollars more to do. Also, in case of liquidity pricing, firms charge different prices to customers based on their preferences for certain places. For example, in cricket matches, ticket prices are different depending on the location, although the cost of providing in each place is the same.
Many people judge the quality of the commodity price for taking a higher price as a sign of good quality. Sometimes customers do not have information on actual prices of products as judging the quality of the product by its price. This type of behavior requires sellers to increase prices of their products despite the fact that real prices are low. Customers also lead to prices in their minds, these prices are known as reference prices. In order to obtain higher profits, sellers have to influence the reference price of the customers.
Many organizations try to promote their products by cutting down the prices of their products below list price or costs. These promotional pricing helps merchants to attract customers in a short period of time. However promotional pricing can be dangerous for the organization, because it can ruin the reputation of the organization. Just as these practices are easily copied by competitors and help organizations build their brand in the long term.
The companies also charge different prices are the customers who live in different parts of the country or the world. If customers are living in remote areas, companies have to charge higher prices to cover the cost of delivery, but this will result in the loss of customers to competitors. Therefore it becomes difficult for the company the possibility to apply uniform prices across the country price or charge according to the geographical conditions in which the customers live.
Many organizations operate in different countries, because they have to decide whether to charge uniform prices or sell products according to the situations of the countries in which organizations operate. There are several factors that affect the pricing decision of companies such as consumer perception, economic conditions, law and order, the marketing objectives of the company, etc. These factors help organizations be able to charge similar prices or different throughout the world. For example, in many cases the organizations to charge higher prices for people living in remote countries because of differences in income per capita.