Retail Pricing - Different Types of Pricing Models
The sale of goods from fixed points (malls, department stores, supermarkets and so on) to the consumer in small quantities for his own consumption is called as retail. According to the concept of retailing, a retailer doesnt sell products in bulk; instead sells the merchandise in small units to the end-users.
Cost Plus Pricing Mechanism
Every organization runs to earn profits and so is the retail industry.
Cost plus pricing works on the following principle:
According to cost plus pricing strategy the retailer adds some extra amount to the actual cost price of the product to earn his share of profits. The final price of the merchandise includes the profit as decided by the retailer.
Cost Plus Pricing
Manufacturer Suggested Retail Price (Also called List Price or Recommended retail price)
According to manufacturer suggested retail pricing strategy the retailer sets the final price of the merchandise as suggested by the manufacturer.
The cut throat competition in the current retail scenario has prompted the retailers to guarantee excellent customer service to the buyers for them to prefer them over their competitors.
Pricing Below Competition
According to pricing below competition policy
Prestige Pricing (Pricing above competition)
According to prestige pricing mechanism, the price of the merchandise is set slightly above the competitors.
The retailer can charge higher price than the competitors only under the following circumstances:
Exclusive Brands at the store.
Brand image of the store
Prime location of the retail store
Excellent customer service
Merchandise not available at any other store
According to discount pricing, the retailer sells his merchandise at a discounted price during off seasons or to clear out his stock.
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