Accounting Assignment Help With Price Fixation

It needs a Marketing Strategy for any business to run. This marketing strategy is set by the Marketing Mix which consists of:

  1. Product
  2. Price
  3. Place
  4. Promotion

The price among these factors plays an important role. It means the monetary value at which the product will be sold. Price in another terms refer to the consideration paid by the buyer to the seller for purchasing of goods, assets or services. Price is paid by the buyer in exchange of the transfer of ownership of the goods, services or assets. In commerce, generally the price is fixed by what buyers are willing to pay and what the sellers feel convenient to charge keeping in regard the competition business’s strategy.

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The fixing of the price is an important aspect in accountancy. Price is the end result of the functions of the business. It is the price that will compensate for all the expenses and overheads incurred in the business and it will bring the profits.

There are various methods of setting up the price. There are basic 11 strategies or types of price fixing:

1. Premium pricing – This type of policy involves setting a price higher than what the competitors have set just to achieve a premium position in the market. Thus strategy can be adopted only if the business has some advanced and unique product. This type of strategy is found only in monopoly markets or in oligopolies where only a few business enterprises exist. For example: Audi and Mercedes are the companies who enjoy the benefit of setting higher prices because of their extremely advanced and unique services.

2. Penetration pricing – The penetrating price strategy refers to setting a price by which the market could be captured. Thus the price set in such kind of market is relatively low as compared to other competitors. As the demand for the products expand the prices are increased. This strategy is used to enter the market. Usually this kind of strategy is used by the small businesses to enter into the market or to launch a new product. This is done to create a new brand name in the market. The pricing policy is set in such a way that it is customized to attract the price sensitive customers who can be made to switch to cheaper product fast. But this kind of policy does not last long enough as new businesses keep penetrating the market or the business’s prices policy fail miserably that the business does not survive.

3. Economy pricing – The economy pricing model focuses on setting the prices of the products in such a way that they are very low. The products are made at a large scale by lowering the costs of the products which makes it possible for the business to charge such a low amount from the customers. Example: Walmart, Lidl and Aldi.

4. Skimming price – This kind of business strategy is formed by the businesses that are enjoying a premium position in the market. They try to earn as much benefit they can make out of their position. But this situation does not stay for long and is soon the market is taken over by the competitors by imitating the product or creating the substitutes for the same. Thus a business can avail the benefit only until the replica of the same product or a better product does not show up in the market. This is why the businesses keep advancing their products so as to not lose the market’s premium positioning.

5. Psychological pricing - This type of pricing strategy focuses on setting the prices in such a way so as to attract the consumers to buy their products. The marginal concessions are given to the customers. For example a product being sold for $4.99 will attract the consumer more than $5. Thus many of the online sellers and mall sellers use this technique to increase the sales.


6. Neutral strategy – It means that pricing the product in such a way that the price of the product remains the same throughout the product cycle of the product i.e. Introduction, Growth, Maturity and Decline. This strategy does not help in increasing the Brand Management Tutors or increasing the sales in the market. Moreover in the stage of decline of the product no counter-measures can be taken and this policy of pricing will fail.

7. Captive product pricing – It is that type of pricing which focuses on pricing the captive products that are sold along with the core product. Example: Ink is needed for a Printer. Here Ink is a Captive product and printer is the main product. The cost of the printer is not high but the cost of ink is kept high relatively. Thus the business earns a huge profit margin by selling the captive product.

8. Optional product pricing – This kind of pricing is used in those businesses where the main product is accompanied with some other optional products. The main focus stays on the core product and less on the optional product. Example: In hotel services; the main charges are for the room rent and less on the other optional facilities made available in the business. These facilities can be availed by the customers on their own convenience and will. If they avail these kinds of optional products they have to pay for them accordingly.

9. Bundling price – Bundling Price refers to the selling of two different products but as a bundle. It is 1+1 offer where on buying one product you get another one for free. This kind of strategy attracts consumers. But this kind of pricing is usually used in case of stock clearance.

10. Promotional pricing strategy is just like Bundling price. But the motive of bundling here is not for stock clearance. Rather it is done to promote the products. Here one product is sold and another is one is given for free which is of a new type and is meant for promotion. Thus this is a strong technique to promote product in the market.

11. Geographical pricing – This type of strategy is designed with taking in regard the place of production and selling. It is influenced by the inflation of the area, taste of the consumers, preferences, income group of the people etc.

Therefore a business’s functioning is highly reliable on the proper formation of policies. The applicability of Price Fixation Policy is important from the point of view of business. This needs to be implemented very carefully and with deep analysis. This can get complicated at times but we are here to help you at where you can contact us at anytime and we will help you with your queries and helping you out with your assignments. We respect that you can’t lose on marks and that is why we are here to provide you with the best facilities and qualitative results. You can also take online classes from the best tutors. We believe in providing the best services for your satisfaction. We serve our clients with good and satisfying work and with complete dedication.

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