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Objective 3.03: Demonstrate ways to compute client costs of goods and services. There are many ___________ that affect pricing Economic Factors Supply: the amount of ______ or services that producers are willing to provide Demand: the amount of goods or services that buyers are willing to _____________. Competition How your _________ is pricing their product or service may determine how YOU will price yours. Costs and Expenses In order to make a ______, your prices must be set to exceed your costs and __________. Pricing Strategies Demand-based Pricing Set your price ____________ to what customers are willing to pay Must have a good understanding of the ___________ perception of the product or service. Competition-based Pricing Determine your competitor’s pricing. Then: Price below the __________ Price above the competition Price in line the with competition. One-Price Policy All customers pay the same price. Psychological Pricing – price is based on the customer’s perception Prestige pricing: ________than average price to suggest ______________, status, prestige. Psychological Pricing cont. Odd/Even pricing Odd prices suggest ___________ – 4.99 Even pricing suggest higher quality – 5.00. Discount Pricing – reductions from the usual price of a product or service Cash discounts: encourage prompt ___________ Quantity discounts: offered to buyers for placing large _________ Promotional discounts: offered to sellers who are willing to promote a product or service Seasonal discounts: offered to buyers who are willing to buy in advance of __________ buying season. Markup Amount ____________ to the cost of an item to cover expenses and ensure profit Markup can be based on: A standard _______________ the business needs per item to cover expenses The markup of competitors The average __________ for the industry. Formulas for Calculating Cost, Retail, Markup, and Markup Percentage Markup / Cost = Percentage of Markup $5.00 / $15.00 = 33% Retail - Markup = Cost $15.00 - $5.00 = $10.00 Cost + Markup = Retail Price $25.00 + $15.00 = $40.00 Cost x Markup % = $ Markup $10.00 X 150% = $15.00