Pricing Models


This concept will help professionals to better understand the methods and strategies for leveraging pricing power in their company’s daily operations. It is supported by industry examples, professional tools and additional resources.

Technique Overview

Pricing Models

Pricing Models Definition

Price is one of the key variables in the marketing mix. There are four general pricing approaches that companies use to set an appropriate price for their products and services: cost-based pricing, value-based pricing, value pricing and competition-based pricing (Kotler and Armstrong, 2009). The cost of production sets the lower limit while the upper limit is set by consumer perception about the product/service (McCarthy et al., 2001). Companies must also consider competitor prices to find the most suitable price between these two extremes (Cravens and Piercy, 2008).

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Business Evidence

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Business Application

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Professional Tools

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Further Reading

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Pricing Models References (4 of up to 20) *

  • BBC News (2009) Prius Tops Japan’s Car Sale Chart. [Online] Available at: news.bbc.co.uk/1/hi/business/8136237.stm.
  • Cravens, D.W. and Piercy, N. (2008) Strategic Marketing. McGraw Hill, US.
  • Doyle, P. and Stern, P. (2006) Marketing Management and Strategy. FT Prentice Hall, US.
  • Drummond, G., Enson, J. and Ashford, R. (2007) Strategic Marketing: Planning and Control. Butterworth-Heinemann, US.

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