This week we learned about Setting the Right Price. The one part of this chapter that really stood out to me is was in the slide presentation where it talked about value pricing. The slide presentation showed the steps to creating a value pricing system. I thought the following two points were particularly use full, they are:
- Companies that set prices using a cost-plus model—adding a predetermined percentage to a product’s cost/unit to produce a profit—may be leaving money on the table.
- Instead, a company should use the cost-plus model to determine its pricing threshold and then use value-based pricing to set the best price.
To me the idea of using the cost plus model to come up with a threshold was interesting. At the store I work at, we use the cost plus model. I didn't realize that we could potentially be leaving money on the table. The idea of value pricing is one that I would use for any retail business.
All in all this chapter had really good information. The same can be said for the class in general, I now know that marketing is much more than advertising.