How Prices are Named

29-Jan-2023

HOW PRICES ARE NAMED

Pricing or Price is the key element in the traditional marketing mix (the 4Ps) and also the enhanced marketing mix (the 7 Ps). This is the element which earns revenue. This is highly critical because this is the strategy which can make or mar the business. The firms must make it both ways –the price must

(1) Get profits for the firm, and

(2) Give value to its customers.

For goods the price has a single name “Price”, but for services it has several names like:

·       Allowance          

·       Assessment      

·       Bribe                  

·       Brokerage

·       Commission      

·       Consideration   

·       Contribution      

·       Coupon Rate

·       Cut                      

·       Expenses          

·       Fare                    

·       Fees

·       Honorarium       

·       Interest              

·       Package            

·       Premium

·       Rate                   

·       Remuneration   

·       Rent                   

·       Retainer (Fee)

·       Salary                

·       Service Charge 

·       Subscription      

·       Tariff

·       Taxes                 

·       Ticket                 

·       Tip                      

·       Token

·       Toll                     

·       Tuition                

·       Wages               

·       Hair Cut

Pricing for goods is easy and straight forward, while for services it is complicated, may be controlled by several authorities, varies with time, place, people, etc.

[ Please visit my earlier Blog on 15-Jan-2022 on "Cost, Price & Value" here:

Himansu Sekhar's BLOG: January 2022 (hisema.blogspot.com) ]

 

Cost, Price & Value

15-Jan-2022: 

Cost, Price & Value: Explained in short in the Marketing parlance

Cost:

• The dictionary meanings are: the price paid to acquire, produce, accomplish, or maintain anything; an outlay or expenditure of money, time, labor, trouble, etc.
• Cost means a price that must be paid for something or a sacrifice.
• Cost most often refers to a specific amount of money that a seller wants for the item they are selling. However, cost is also used more generally to mean whatever the price of an item is.
• But in today’s world of Marketing, Cost is an objective term which generally refers to all types of expenses incurred to produce, procure, create or manufacture an item.
• Cost is of Objective nature. It remains constant under unchanged circumstances.

Price:

• The sum or amount of money or its equivalent for which anything is bought, sold, or offered for sale.
• Price is used mainly of single, concrete objects offered for sale; charge, of services:
• But in today’s world of Marketing, Price is an objective term which generally refers to Cost plus a margin amount which is called profit, which rewards the maker / producer / procurer / creator / manufacturer.
• Sometimes the Price may be less than the Cost under certain undesirable constraints.
• Price is of Objective nature. It may change on various different reasons for the same cost.

Value:

• Intrinsic worth, merit, or importance of an object;
• Monetary or material worth, as in commerce or trade.
• Value, worth imply intrinsic excellence or desirability.
• Value is that quality of anything which renders it desirable or useful:
• Value is of Subjective nature. It doesn’t change on its own.
• Sometimes the Value of an Object can be changed which is called the “Value Addition”, by undergoing certain processes.
• Value is sometimes divided into two types:
• Objective, Physical, Utility; which remains constant.
• Subjective, Emotional, Esteem; which varies from person to person, time to time, etc.

Chinese Goods

Food for Thought on 19-Oct-2017: 

Chinese Goods: Everyone knows China has flooded Indian Market with its goods. We import 5 times worth of goods from china that of we export [ 2016- Import $58.4 Bn, Export $11.8 Bn ]. Now, the question is: How to reduce Import from China? It has several points to explain. (1) Do we really need those imports? (2) Can’t we produce these good in India? (3) How to reduce dependence on china arising out of the national sentiment? Let me give short and simple answers in the following: 

(1) NO, we don’t- but over the years we have become dependent on china for even non critical items, there by jeopardizing our own small time artisans. We must cut down these imports. 

(2) We CAN! But again “At what cost?” Today, the situation is that we lack in infrastructure, and productive labour. Even if we set up units to manufacture, the cost of production would be too high to sustain. China has an advantage: it can produce the same product with a very wide range of quality, starting at very low to very high. [ Example: Say a mobile of $10 quality to $1400 quality ]. Everyone knows iPhones are manufactured in China- Imagine if these were manufactured in the USA- these would cost double or more. 

(3) We must thrive for (a) reduction in Chinese import, and (b) enhancement of our own manufacturing facilities on a long term basis. I know it can’t happen within a few years, but we have to start as soon as possible. Think it over!