Pricing Policy

FORMULATING A PRICING POLICY

WEEK 2: ASSIGNMENT

Robin Wiley-Duca

My product: 23” Computer Monitor

My lowest competitor price according to the Empirical Rule is $90.95. An example would be end of year when there is still an excess amount of product left to sell. Lower of Cost or Market otherwise known as (LCM); is the formula used to help decide how to market the leftover inventory. This would be the best time to use the lowest competitor price in selling the product. Supply and demand is too low.

My average competitor price according to the Empirical Rule is $218.21. An example would be when the product has been on the market and available to the consumer for a set period of time. The consumer has had enough time to research and choose the best place to purchase this product. At this pricing range the retailer normally offers other specials with the average competitors pricing policy; (ie. free shipping, no money down on financing).

My highest competitor price according to the Empirical Rule is $345.47. An example would be when the same product is made with newer specifications, which raises the supply and demand for the consumer to have the newest up to date product. Best time of the year to price competitively is when this product is announced to the public for sale. Supply and demand is too high.

When a retailer prices the product below the lowest competitor pricing, this could be for several reasons, the company could be suffering from recession, or demographics have taken an affect on the company. Example on demographics would be if the neighborhood real estate has taken a dive and the income has dropped to lower income households. When families lose their jobs, or other retailers going out of business. When companies price a product above the market value this alone is illegal and called price gouging. Price gouging is pejorative term referring to a situation when a seller prices goods or commodities much higher than is considered...