Pricing for Profits
Interior Design II: Objective 3.03
Factors Affecting Price
 Economic Factors
 Businesses involved in ____________________
 Competition
 _________________ and Expenses
Economic Factors
 _________________: the amount of a good or service that the producers are willing to provide.
 The producers are more willing to supply products/services in ___________________ amounts when
prices are high; less willing to do so when prices are low
Channels of Distribution
 Each business that is involved in the _______________________ of a product ___________________ the price of
the product.
Competition
 How the competition is pricing their product/service may determine how _____________ will price
yours.
Costs and Expenses
 In order to make a profit, your ___________________ must be set so that they will _________________ your
costs and expenses.
Pricing Strategies
 ____________________-based pricing
 __________________-based pricing
 _________________________-based pricing
Cost-based pricing
 Cost of the product + cost of doing business + projected profit margin = _____________________ price
Demand-based pricing
 Set your price according to what customers are _________________ to __________________
 Must have a good understanding of consumers __________________________ of the product/service
Competition-based pricing
 Determine your _______________________________ pricing
 After this you must decide to:
o Price ____________________ your competitor
o Price __________-_________________ with your competitor
o Price ___________________ your competitor
Pricing Policies
 ___________________-price policy – All customers pay the same price
 __________________________-price policy – Customer can negotiate for the best deal they can get
Pricing Techniques
 Psychological Pricing: Uses the price to ___________________ the customer’s perception of the
product/services
 Discount Pricing: Offers ___________________________ from the usual price of the product/services
Pricing Techniques
 Psychological Pricing
o Prestige Pricing – ____________________ than average pricing to suggest exclusiveness, status,
prestige
o Odd/Even Pricing
 ____________________ prices suggest bargains
 ____________________ pricing suggest higher quality
Discount Pricing
 _______________: encourages customers to pay bills earlier
 ________________________: offers to buyers for placing larger orders
 __________________: offers to buyers who are willing to buy in advance of customary buying season
 ________________________: offers to buyers who are willing to promote a product/service
Mark-up Percentage
 Based on the amount the business needs per item to cover _________________________
 Matches the mark-up of competitors
 Based on the average mark-up of the industry
Mark-up
 __________________________ amount to the cost of the _____________________ to cover expenses and ensure
profit
 Not generally decided on an item-by-item basis
 A standard _____________________________
 Mark-up = ________________________________
Cost
Retail Price
 Cost X Mark-up % = $_________________________
 $Markup + Cost = _________________________ Price