Pricing a Product

• Markup pricing

  Price is the result of adding a set amount to the cost
• Products are sold through different sources at different prices in demand pricing
• 4 basic rules of pricing a product

  • Price of product should cover all costs and profits
  • Cost of product should be affordable
  • Price of product should be reviewed based on market demand, competition, and profit objectives
  • Price of product must be made to assure sales or marketability
• Cost-plus pricing

  Covers all overhead expenses plus desired profits required
• Demand pricing covers the combination of volume and profit
• Demand pricing


  Used in products sold be retailers, discount chains, wholesalers, and direct mail marketers
• Demand pricing is difficult to master
• 4 methods of product costing

  • Cost-plus pricing
  • Demand pricing
  • Competitive pricing
  • Markup pricing
• Competitive pricing


  Used when there is an established market price