Pricing and Credit Decision Making

Pricing and Credit Decision Making

Question 1
Cost-Plus Pricing
Includes the variable costs associated with the goods, as well as a portion of the fixed costs of operating the business (What is cost-plus pricing? n.d.). I usually use cost plus pricing when I build computers for clients. $500 is added as labour costs to the price of computer parts. This is done to keep prices low and to maintain a basic markup.

Customer Driven Pricing
Is a “method of pricing in which the seller makes a decision based on what the customer can justify paying” (Customer-Driven Pricing Definition n.d.). I have not and most likely will not use this pricing method in my business. I believe that the customer will not be able the accurately value the price of the services we offer.

Competition Driven Pricing
A method of pricing in which the seller makes a decision based on the prices of its competition (Competition-Driven Pricing Definition n.d.). In times past I would choose this pricing method to set the price for some of my computer repair course. It would normally have a “UWI graduate” tutor as part of the advertisement in order to convey that it is on par with a university standard.

Share Driven Pricing
This pricing strategy sets prices in order to maintain market share. I believe that many of the tertiary level institutions use this type of pricing method in order to maintain or grow their market share in the education market.

Value Based Pricing
“The setting of a product or service's price, based on the benefits it provides to consumers” (Value-Based Pricing Definition n.d.). I choose this pricing method for my Google Apps for SME’s course and set the price based on the value that it would bring to an organization. I believe that most students participating in this course recognizes that the fees reflect the benefits that they will derive rather than an hourly rate.

Price Skimming
A strategy by which a company “charges the highest initial price that customers will pay and then as the demand...

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