Batch pricing - Pricing

Batch pricing

The opportunities for profit are related not only to what to assign a price, but also to what prices to set - for individual goods or their sets. For example, do you need to sell a computer and a monitor together or separately? Should the cost of warranty service include in the price of the refrigerator?

Batch sale is at the center of the strategies of a number of firms (selling computers, software, automotive, selling food and drinks, travel services, etc.).

In most cases, we are talking about complementary goods. Although complementarity promotes package pricing, this is not a prerequisite for the application of this strategy. The package price is usually lower than the amount of individual prices. However, a discount is not a prerequisite for batch pricing. If individual goods alone are not of great value to the user and they really need to be combined in the package & quot ;, some buyers are willing to pay more compared to individual prices, provided that the goods are optimally complementary and their integration is properly produced. The allowance for a complete set can be justified also in the event that individual goods are difficult to access.

A vivid example of batch pricing: the implementation of uniform tickets for transport (metro, bus, tram, trolleybus); sale of furniture sets, setting prices for complex lunches in public catering.

The most important forms of batch pricing include:

pure - only the package is offered; goods can not be bought separately;

special - in this case, there are also packages and some products from them on sale. Prices are usually set for each package item and package as a whole;

Linked ( Forced ) Sale - the buyer of the main product agrees to purchase one or more additional goods needed to use the main product from the same supplier. The main is often durable goods (copier), and additional - short-term goods (cartridge, paper).

Packaging can save costs - because the buyer in this case saves time and effort. The manufacturer is able to reduce costs as a result of increased sales (economies of scale) and due to the interrelationships between products. Another advantage in costs can arise in connection with the reduction in the cost of equipment.

Thus, the basic conditions necessary for setting prices for sets are as follows:

1) the difference in the cost of the set and the sum of the prices of its elements should be evident to buyers. Only in this case the buyer will be interested in acquiring the kit, rather than its individual elements;

2) the elements of the set should not be interchangeable, otherwise the formation of the set and its implementation will become impossible;

3) all elements of the set should be in demand. Their selection should in no case be carried out on the principle of loading. In a market environment where the buyer has a choice, an attempt to implement the "ballast" leads not to the growth in sales volume, but to the loss of the buyer.

Example . The snack bar offers a salad for visitors at a price of 47 rubles., French fries - 70, juice - 30 rubles. Let's say 40% of visitors buy salad and French fries, 40% - French fries and juice, 20% - French fries. The daily number of visitors is 100 people.

Which strategy will be best for implementation if the average level of gross income is 35% in the diner?

Decision: The daily revenue of the diner is

40 people • (47 + 70) + 40 people. • (70 + 30) + 20 people. • 70 = 3480 + 4000 + + 1400 = 8880 rubles.

Gross revenue for such revenue is 8880 • 0.35 = 3108 rubles.

A full-volume strategy of price discrimination, when salad, juice and french fries are sold together, will give the maximum revenue of 100 • (47 + 70 + 30) = 14,700 rubles. However, the "clean set" is illegal as imposing a forced assortment.

The best way to maximize revenue will be to maintain the previous price for individual dishes, set the price for a complex of salad, French fries and juice below 147 rubles, but not less than 89 rubles. the price that an average visitor spends on buying.

For example, set the price of a set of 130 rubles: a salad - 37 rubles. (10 rubles cheaper, or 22%), french fries - 70 rubles. (unchanged, as each visitor and so on it buys), juice - 23 rubles. (7 rubles cheaper, or 22%). At the same time, the total discount on the complex is 12%.

Batch pricing has one advantage. It creates the effect of a comparable price, the set is offered at a price much lower. Clearly, some buyers will react to such a strategy by acquiring a set, and the total revenue will increase. In addition, additional customers will be attracted.

Let's continue the example. Let's admit, at an establishment of the price of a complex of 130 rbl. the structure of the purchase has changed as follows: 60% of visitors buy a set, 20% - only French fries, 10% - French fries and juice, 10% - salad and French fries. Even if you keep the number of visitors unchanged - 100 people - revenue grows:

60 • 130 + 20-70 + 10 (70 + 23) + 10 (37 + 70) = i 1 200 rubles.

The daily gross income, respectively, is 11 200 • 0.35 = 3920 rubles, which is 812 rubles. more.

Batch pricing, if necessary, is implemented by the organization in at least two ways.

1. An organization can shift some of the price of a basic (primary) product to additional products or services. At the same time, the price of the underlying product is underestimated (mainly at the expense of profit), but the price of the additional product (service) rises by the same amount (or even greater).

Example . The organization sells a dishwasher at a price below the current market price of 2000 rubles. But the free warranty repair of this machine is provided by the organization provided that the dishwasher is connected only by the specialists of the organization. Connection is chargeable. The cost of connection is additionally included and 2000 rubles. (and often more) on which the price of the car was lowered.

2. The organization for the main product sets a price that is known to be too high. But the additional product (service) is sold at a reduced price or even for free.

Example . Organization Linzmaster sells points at a price, which includes the price of the second pair of points received by the customer formally for free.

In some cases there is a tendency to depacketing & quot ;. The expediency of this should be considered under the following conditions:

the opportunity to receive higher margins. They can result from a lower elasticity in price for individual items. This situation is likely if the package price becomes too high;

further penetration of the market. In some cases, when selling products separately, you can penetrate new markets;

increased standardization and compatibility. The more components are standardized and characterized by compatibility, the riskier the pure packaging. Buyers are able to build their own system based on components purchased in different locations. A strong preference given by a user to a particular component can induce him to abandon completely the services of the supplier if the latter sells exclusively on the basis of the system or packages;

the appearance of independent goods. Information, technical advice, transfer of know-how, maintenance, user training, etc. become more important than production equipment. Traditionally, the listed services did not have a separate price, and their cost was included in the packet price. This traditional practice is becoming increasingly problematic if some competitors offer not enough additional services, and the user, when making a purchase decision, is only interested in the price of the equipment.

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