Pricing

Pricing is the process of determining what a company will receive in exchange for its product. Pricing factors are manufacturing cost, market place, competition, market condition, brand, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a fundamental aspect of financial modelling and is one of the four Ps of the marketing mix. (The other three aspects are product, promotion, and place.) Price is the only revenue generating element amongst the four Ps, the rest being cost centres. However, the other Ps of marketing will contribute to decreasing price elasticity and so enable price increases to drive greater revenue and profits.

Pricing is the manual or automatic process of applying prices to purchase and sales orders, based on factors such as: a fixed amount, quantity break, promotion or sales campaign, specific vendor quote, price prevailing on entry, shipment or invoice date, combination of multiple orders or lines, and many others. Automated systems require more setup and maintenance but may prevent pricing errors. The needs of the consumer can be converted into demand only if the consumer has the willingness and capacity to buy the product. Thus pricing is very important in marketing.

Objective of purchasing management

v  To purchase the required material at minimum possible price by following the company policies.

v  To keep department expenses low.

v  Development of good & new vendors (suppliers).

v  Development of good relation with the existing suppliers.

v  Training & development of personal employees in department.

v  To maintain proper & up to date records of all transactions.

v  Participating in development of new material and products.

v  To contribute in product improvement.

v  To take Economic "MAKE OR BUY" decisions.

v  To avoid Stock- out situations.

v  To develop policies & procedure.

Principle of purchasing management

1.   Buying Material at right QUALITY.

2.   In the right QUANTITY.

3.   From the right SOURCE.

4.   At the right PRICE.

5.   Delivered at the right PLACE.

6.   At the right TIME.

7.   With right mode of TRANSPORT.

  Psychological pricing 

Psychological pricing (also price ending, charm pricing) is a pricing/marketing strategy based on the theory that certain prices have a psychological impact. Consumers tend to perceive “odd prices” as being significantly lower than they actually are, tending to round to the next lowest monetary unit. The theory that drives this is that lower pricing such as this institutes greater demand than if consumers were perfectly rational.