Market pricing methods do not apply. Pricing methods - tips, examples, calculations. Cost-based pricing method taking into account full costs
Market pricing methods quite varied. There are many methods for setting the optimal price for a product. It is almost impossible to cover absolutely everything with attention. Therefore, we can dwell only on the most relevant and not problematic for implementation in practice.
Pricing is a dynamic concept. You cannot choose a pricing method once and stick to it for decades. The price is influenced by many factors, which include customer preferences and the policies of competitors. For pricing methods to work effectively, they need to be periodically changed, adjusted and reviewed. This is necessary in order not to lose your position in the market in a competitive environment.
Market pricing methods are determined by the value of the product to customers, the intensity of competition, brand attributes and brand loyalty
Pricing in market conditions depends on the market itself (prices of competitors influence when the “race for the leader” or the method of average market prices is relevant) and on the client (prices depend on demand, customer expectations, the value of the offered product for customers).
Market pricing methods take into account not only the level
If we consider the approach in which a company, when setting prices for its goods, proceeds only from the fact that the consumer himself assesses the value of the product offered, then the main factor here is consumer perception. Under such a system, the consumer gives money for “value” and not for cost. Price sensitivity is elastic, which makes it possible to calculate the optimal price of a product for
Market pricing methods will include a method based on competition. Making a decision on the price of a product is determined. In this method, firms choose a policy of setting prices slightly lower or slightly higher than competitors' prices. In this context, the most common methods are: the sealed envelope method (tender pricing) and the current price method (standard prices existing for a similar product on the market are established).
To set a price taking into account demand, you need to study and analyze the market in order to know the dependence of prices on demand.
Another method of market pricing is the method of setting prices, aimed at striking a balance between market conditions and production costs. At the same time, the manufacturer must ensure price ratios with competitors’ products and other products of its company.
When setting prices based on the product range, it is necessary to determine price lines that link the sale of goods in a certain price range. Many have traditional price scales to which both producers and consumers adapt over time. When setting price lines and final prices for goods, it is necessary to take into account the possible reaction of consumers to them.
Pricing in a perfectly competitive market determined by the fact that in such a market there are many buyers and sellers. Therefore, individual market players are not able to influence the price. in this market is conditionally external. Each seller in such a market is actually a price taker. determines the price of goods himself. And this price already establishes the balance of supply and demand for goods.
In a competitive environment, price changes must occur quickly. The company should always have a prepared program in stock that will help timely adopt a counter-strategy to the current pricing situation that arose at the initiative of competitors.
pricing parametric demand competitor
Introduction
1. 2.Pricing methodology . 3.1 2Parametric Pricing Methods 4 1 4.2 3 Conclusion Bibliography Introduction In the conditions of market relations, price is the most important economic category, influencing the economic situation of all business entities from individual individuals to enterprises and the state as a whole. Without a well-functioning system of prices and pricing, regulation and self-regulation of the national economy is impossible. One of the decisive ways to increase the competitiveness of a trade organization is the optimal pricing mechanism and the establishment of factors influencing the determination of the price of a product. Price is one of the main parameters of the competitiveness of a manufacturer's products. How correctly an enterprise determines its pricing policy, chooses a pricing strategy, and justifies the market price of its products largely determines its competitive, and therefore economic, position. Therefore, knowledge of the pricing mechanism, methods of setting and regulating prices for manufactured goods predetermine the feasibility of achieving both short-term and long-term financial and economic results of business activity. The purpose of the test: to consider the main methods of pricing. To achieve this goal, it is necessary to solve the following tasks: give the concept of price and pricing; study pricing methodology; characterize the main groups and types of pricing methods. .Price and pricing: concept, essence One of the key elements of a market economy is prices, pricing, the price system, pricing policy and enterprise strategy, etc. In general, price is an economic category meaning the amount of money for which a seller is willing to sell and a buyer is willing to buy a product. In other words, price is the monetary expression of the value of a product. If the terms of the transaction provide for the exchange of one product for another, then the latter becomes the commodity price of the first product. Hence, pricing is the process of setting prices for goods and services. There are two types of pricing: ) market, in which prices are set primarily by producers; ) centralized (state), in which prices are set primarily by special government bodies and institutions. In the real economy of any state (region), both of these types are always used. However, in a market economy the first type of pricing dominates, and in a planned-distribution economy the second type dominates. The market price is formed under the influence of such factors as demand, supply, production costs, competition, and government intervention in pricing processes. In general, market demand for a product determines its maximum price, that is, the one that can be set by enterprises distributing the product (sellers). Gross production costs (the sum of fixed and variable costs) determine the minimum price of a product, the one that manufacturing enterprises can set. The market behavior of competitors, their policies and strategies in the field of pricing, consumer characteristics, the goods they offer and prices for specific products have a significant impact on price formation. The most important factor in market pricing is also government regulation of prices and pricing mechanisms. In general, there are direct and indirect ways of influencing the state on the processes of formation of the price of a product. Direct (administrative) methods are the establishment of a certain pricing procedure for a certain product (product group). Indirect (economic) methods - aimed at changing market conditions, creating a certain situation in the field of finance, currency and tax transactions, wages, etc. In a market economy, price and the processes of its formation occupy one of the main places. This is determined by many factors. For example, price is a significant parameter of the competitiveness of a product. Pricing policy, enterprise pricing strategy, product price are powerful tools of competition. The price of a product determines such economic indicators of the enterprise as income and profit, etc. However, the main thing is that price, by its nature, is capable of implementing a number of important functions, without which the normal existence of an economic system is impossible. 2.Pricing methodology pricing method parametric The methodology is the same for all levels of pricing, which means that the basic provisions and rules for pricing do not change, regardless of who sets prices and for what period. This is a necessary prerequisite for creating a unified price system. But one cannot equate methodology with technique. They differ significantly from each other: based on the methodology, a pricing strategy is developed, and the methodologies contain specific recommendations and tools (tools) for implementing this strategy in practice. It follows that methods are integral elements of a methodology that combine a whole range of price formation methods. There is, for example, a method for determining prices for new types of products, a method for taking into account natural-geographical factors in pricing, etc. Existing methods differ depending on management levels, types of prices and product groups. Each technique has its own characteristics. But these features and differences should not go beyond the requirements of a single methodology. Thus, techniques are the first most important element of methodology. The second important component of the methodology is the principles of pricing. Pricing principles can be implemented only on the basis of the development and application of appropriate methods (techniques). Therefore, principles and methods are closely related and form a methodology. During the transition to a market, the pricing methodology must remain uniform, which will make it possible to gradually form, according to uniform principles and rules, a price system adequate to market relations. Pricing principles are constantly operating basic provisions that are characteristic of the entire price system and underlie it. 3.Calculation methods of pricing 3.1Cost-based pricing methods Full cost pricing method. This method is based on the fact that the price of a product is formed as the total costs of production and sales, which, regardless of their origin, are written off per unit of production. The calculation is usually carried out in tabular form, where cost items and the amount of these costs attributed to a particular product are recorded. As a rule, costs are usually divided into direct, that is, directly and directly related to a given product, and indirect, that is, those that cannot be directly and entirely attributed to a specific product. To assign the latter to the cost of goods, use the method of distribution proportional to labor costs, the ABC method or other special procedures. To implement this method, it is necessary to establish in advance a certain level of profitability for each product (assortment group of goods), which serves as the basis for calculating the amount of profit included in the price of the product. The level of profitability in modern conditions is not regulated by any regulatory documents, and therefore can be established by the management of the enterprise based, for example, on the adopted pricing policy. Thus, the price of a product calculated using this method is the total costs of the enterprise for the production and sale of products plus the desired profit. Hence the second name of this method "cost plus". Its advantages include the following: 1) the basis for determining the price is the manufacturer’s real costs per unit of production, to which is added the profit necessary for business activity; ) it is easy to set a minimum price limit, which is the sum of the total costs of production and sales of products; ) simplicity and consistency of calculations used in budget planning, budgeting, etc.; ) any enterprise has all the information necessary to calculate prices in the form of accounting records, a system of economic and financial plans, and other internal documentation. Along with the advantages, it should be noted the disadvantages of the full cost pricing method, namely: ) individual producer costs do not reflect the socially necessary costs for the production of a given product, and, therefore, the price of a product can differ significantly from its value, both up and down; ) the price calculated using this method in no way reflects market demand, market conditions, consumer characteristics of the product and much more, which is the methodological and methodological basis of market pricing; ) the use of various methods for distributing indirect costs (attributing their share to a unit of production) can significantly affect the value of the total cost of production, and therefore its price; ) the use of the “desired” profitability indicator allows you to vary the profit margin in unlimited amounts, which is also reflected in the price of the product. The use of this method is advisable either for monopolistic enterprises, or in conditions of single (custom) production, or in conditions of acute commodity shortage. Price method of standard (normative) costs. The essence of this method is that for each element of the costs of production and sales of products, standards are established, for example, industry standards, both in physical and in value terms. Price calculation is carried out using the full cost method, but using standard costs. The price calculated in this way can be called standard. Based on the results of the actual production process, deviations of actual costs from standard costs are monitored, which is the basis for adjusting the standard price. In this case, recalculation is carried out only for those cost elements (costing items) for which deviations are recognized as objective. If there are no deviations in other cost items, then the company has the opportunity to change the standard price only by the amount of deviations. The advantages of this method (along with those noted in the previous method) include: ) the ability to manage costs, since the very essence of the method is based on the use of factor analysis; ) more reasonable pricing (it is possible to identify dependent, that is, factors controlled by the enterprise and factors independent of the enterprise); ) standard costs can be adjusted close to socially necessary. The main disadvantages of the standard cost pricing method are similar to the full cost method. Besides: ) continuous monitoring and comparison of standard and actual costs is necessary, which is very labor-intensive; ) a complex element of the standard cost system is the establishment and continuous adjustment of standards for all cost elements. Since the first two methods are closely related in computing technology, their scope of application is identical. Direct cost pricing method. The essence of this method is that the price of a product is formed on the basis of the direct costs of its production, as well as based on market conditions and expected selling prices. In this case, it is assumed that all conditionally variable costs are direct costs that are directly written off per unit of production. Indirect costs are included in the financial result of the enterprise. Therefore, this method is also called the reduced cost pricing method. The calculation is carried out in tabular form. First of all, the expected price of the product, established in the process of analyzing market conditions, is entered into the table. Next, all direct costs are recorded (item by item) for the production of goods. The difference between the price of the product and the total direct costs gives the financial result of the enterprise in the form of an indicator of gross profit (coverage). From here it is possible to calculate the gross profitability indicator as the ratio of gross profit to the amount of direct costs. The concept of this pricing method assumes that all indirect costs of an enterprise should be covered by its gross profit. If, as a result, all costs (both direct and indirect) are covered, and the “desired” profit is obtained, then the original price can be accepted as the estimated market price. Otherwise, either the original price or the amount of indirect costs for the enterprise should be adjusted. In this case, they proceed from the assumption that direct costs are technologically justified, and there is no need to optimize them. ) the price of a product is to one degree or another oriented to market conditions; ) gross profit is a calculated indicator obtained by comparing two independent variables - the expected price of a product and the amount of direct costs of its production; ) based on the calculated gross profitability indicator, it is easy to identify the most profitable types of products for the enterprise; ) objective information appears for managing indirect costs. The main disadvantage of this pricing method is that it is based on taking into account direct costs, which are individual for each enterprise, since their value depends on the adopted organization and production technology, relationships with suppliers and many other factors. The scope of application of the direct cost pricing method is single and small-scale production in conditions of fairly developed competition. Price method of standard (normative) direct costs. It is a methodological and methodological synthesis of the second and third cost methods. 3.2Parametric Methods Firms often feel the need to design and develop the production of products that do not replace previously developed ones, but complement or expand the existing parametric range of products. A parametric series is understood as a set of structurally and technologically homogeneous products designed to perform the same functions and differing from each other in the values of technical and economic parameters in accordance with the production operations performed. Standard-parametric methods are methods for setting prices for new products depending on the level of their consumer properties, taking into account cost standards per unit of parameter. This group of pricing methods includes: ) method of specific indicators; ) method of regression analysis; ) aggregate method; ) point method. The method of specific indicators is used to determine and analyze the prices of small groups of products characterized by the presence of one main parameter, the value of which largely determines the overall price level of the product. This method can be used to justify the level and price ratio of small parametric groups of products that have a simple design and are characterized by one parameter. It is extremely imperfect because it ignores all other consumer properties of the product, does not take into account alternative ways of using the product, and also completely ignores supply and demand. The aggregate method consists of summing up the prices of individual structural parts of products included in the parametric series, adding the cost of original components, assembly costs and standard profit. The regression analysis method is used to determine the dependence of price changes on changes in the technical and economic parameters of products belonging to a given series, constructing and aligning value relationships. This method allows you to model price changes depending on their parameters, strictly determine the analytical form of the relationship, and use calculated regression equations to determine the prices of products included in the parametric series. The regression analysis method is more accurate and more advanced among other parametric methods. Linking prices with quality is achieved using economic-parametric techniques and computer technology. The point method is that, based on expert assessments of the importance of product parameters for consumers, each parameter is assigned a certain number of points, the summation of which gives a kind of assessment of the technical and economic level of the product. It is indispensable in cases where the price depends on many quality parameters, including those that cannot be measured quantitatively. The latter include the following qualities: product convenience, aesthetics, design, environmental friendliness, fire resistance, organoleptic properties (smell, taste, color), fashionability. 4Market pricing methods 4.1Consumer-Driven Pricing Methods Enterprises that use consumer-oriented market methods primarily focus their pricing practices on the consumer’s value perception of their products and on the current level of demand for the product. The method of calculating prices based on the economic value of a product is based on taking into account the magnitude of the economic effect received by the consumer in the event of purchasing a specific product. The procedure for calculating prices using this method consists of the following steps: ) determination of the economic effect associated with the use of goods of this group; ) determination of all parameters that affect the magnitude of the economic effect and are common to all competing products, including the product of a given manufacturer; ) calculation of consumer preferences according to particular parameters of the analyzed goods and assessment of the integral value for the buyer of each product; ) calculation of the indifference price based on the integral value of the differences of all analyzed goods. The method of assessing the maximum acceptable price is used when setting prices for standardized industrial goods, when the main benefit to the buyer is to reduce costs. At the same time, the maximum acceptable price is understood as such a price at which the buyer has zero savings on costs in the process of using the product. The procedure for determining the price of a product using this method comes down to the following calculations: justification of possible options for use and conditions of use of this product; identification of all non-price advantages (benefits) for the buyer when using this product; identification of all non-price costs of the buyer when using the product; setting the price of a product subject to the “advantages-costs” balance. 2Methods focused on characterizing demand for a product The margin-based pricing method is most often used by businesses operating in an imperfect, immature market. A characteristic feature of such a market is the high price elasticity of demand, when even with a slight increase in price, sales volume decreases significantly, and when it decreases, on the contrary, it increases. In this case, the enterprise tries to determine the price in the area where the marginal income and expenses coincide, that is, at the level that ensures the achievement of the highest possible profit. Having found the sales volumes corresponding to this point, the current price of the product is determined from the demand curve. Using the method of determining prices based on limit analysis is associated with certain difficulties: the enterprise must be able to accurately distinguish between fixed and variable costs in order to calculate the marginal values and establish the optimal sales volume; it is necessary to have a sufficient amount of information to accurately construct a demand curve (demand equation); Demand in the market should indeed be mainly influenced by price changes, and the volume of consumption should correspond to the price level. Because of this, the method of determining the price based on the analysis of limits is used quite rarely, since it allows only a certain level of possible price to be established. The method of determining the price based on the analysis of the peak of losses and profits is based on establishing such a volume of production (sales) at a fixed price when the total amount of profit and the total amount of costs are equal. This method of setting prices is appropriate when the pricing policy of an enterprise is aimed at maximizing profits. 3Competition-oriented pricing methods The peculiarity of these methods is that the price of the product is calculated taking into account the competitive situation in the market and the level of competitiveness of the enterprise. The method of following market prices is based on the fact that each seller operating in a given market sets prices for his goods based on the actual current level of market prices and without significantly violating it. If a particular seller enhances the differentiation of his goods in relation to competing goods, then he has the right to set a price that differs from the usual price level in this market. For this reason, this method is usually used if the goods are standardized, for example, cement, sugar, etc. As a result, each seller operates in a special price zone, established by him independently, but taking into account the prevailing price level in the market. It must be remembered that any agreements to agree on price levels are illegal from the point of view of antimonopoly law. The method of following the leader's prices presupposes the presence of an enterprise that dominates a given market, which allows it to dictate market conditions, including in the field of pricing. Then the remaining enterprises secretly determine their prices based on the price level of the leading enterprise. Typically, enterprises that follow the leader in shaping their pricing policy have a low level of competitiveness. Therefore, they have no choice but to keep prices for their products at the level set by the leader. As a result, although competing enterprises do not enter into any agreement on prices among themselves, in practice it turns out that they sell goods at prices that are at a certain, seemingly agreed level, that is, averaging of market prices occurs. In reality, several price levels are not established depending on the competitive position of a given enterprise in the market, its ability and the degree of product differentiation in relation to the goods of the dominant enterprise. In most cases, there is a situation where the prices of each enterprise are limited to certain limits and are not higher than the corresponding prices of the leading enterprise. A pricing method based on customary prices accepted in the practice of a given market. Habitual prices are considered to be prices for a certain group of goods that remain at the same level for a long period of time in a fairly wide market space. A feature of such prices is their high elasticity. A change in the level of usual prices occurs in cases where, for one reason or another, the opinion becomes widespread among buyers and/or sellers that the usual level of quality of a product has changed, its functional properties have expanded, its design has improved, etc. That is, the product is given a new attractiveness and thus transferred to a different price group. Prestige pricing is essentially an analogue of the previous method, with the only difference being that it is used for goods belonging to a special group. There are goods and services that have a higher level of quality, the so-called executive class (jewelry, certain brands of cars, furs, etc.). The main value of these goods is to emphasize the certain status of their owner. If these goods are sold at regular prices accessible to the average consumer, then they will lose their main consumer value - elitism. Therefore, it is not possible to sell them at low prices. In addition, low prices for such goods may raise doubts about their quality, and the effect of exclusivity and special inaccessibility of the product will be lost. Such goods are initially set at increased prices, and thus signal the special status of both the goods and their potential buyers. To successfully apply this pricing method, an enterprise must gain and subsequently continuously maintain the image of an ultra-high-class manufacturer in relation to the goods sold. The competitive (tender) pricing method is used in various types of auctions. A peculiarity of the process is that a large number of buyers seek to buy a product from one or a small number of sellers, or, conversely, when a large number of sellers seek to sell a product to one or a small number of buyers. If the auction was organized by sellers and the competition is between buyers, then the buyer who wrote the highest price wins. If the auction is conducted by buyers and the competition is between sellers, then the seller who sets the lowest price wins. A variation of the competitive pricing method is the auction method of determining prices, which is used in commodity markets, securities markets, etc. When using the raising method of conducting an auction, the lowest price is called first, and then it is raised. The goods go to the one who named the highest price; When using the downward (Dutch) method of conducting an auction, the highest price is called first and if a buyer is not found at that price, then the price is reduced. In this case, the right to conclude a purchase and sale transaction for this product is obtained by the buyer who first accepts the seller’s price and thereby agrees to the highest price compared to other participants in the auction. Many business managers consider competitive pricing methods to be the most effective. This is due to a number of reasons: there is no need to carry out complex analytical calculations that require the involvement of highly qualified workers; the level of business risk that is inevitable when setting your own price is reduced; the price change is not related to the dynamics of own costs or demand, but is related to the pricing actions of competitors. Conclusion From all of the above, the following conclusions can be drawn: Price is an economic category meaning the amount of money for which a seller is willing to sell and a buyer is willing to buy a product. In a market economy, price and the processes of its formation occupy one of the main places. Pricing methodology is a set of general rules, principles and methods. Namely: development of a pricing concept, determination and justification of prices, formation of a price system, pricing management. All pricing methods can be divided into two groups: calculated and market. The essence of calculation methods of pricing is that they are based, first of all, on taking into account the internal conditions of production at a particular enterprise, without taking into account the requirements of market conditions. A feature of market pricing methods is that the basis for calculating the price is, first of all, taking into account external factors (consumer attitude towards the product, assessment of the competitive situation in the market, etc.). The costs of production and sales of products are considered by the management of the enterprise only as a limiting factor, below which sales of this product are economically unprofitable. Enterprises that use consumer-oriented market methods primarily focus their pricing practices on the consumer’s value perception of their products and on the current level of demand for the product. Bibliography 1.Lev M.Yu. Pricing - M.: UNITY-DANA, 2011 .Vasyukhin O.V., Fundamentals of pricing - St. Petersburg: St. Petersburg State University ITMO, 2010. .Pricing: workshop / G.A. Makhovikova, I.A. Zheltyakova, N.Yu. Puzynya. - M.: Eksmo, 2008 .Belokonskaya E.G., Pricing: textbook / Ivan. state chemical technology University - Ivanovo, 2009 .Dmitriev D. V., Fundamentals of pricing: textbook. manual - Perm: Perm Publishing House. state tech. University, 2010 .Naumov V.V. Pricing - M.: MIEMP, 2010. .Krivtsov A.I., Pricing: textbook (electronic). - Samara: Samara Institute (branch) RGTEU, 2011. .Akhmetova M.I., Pricing policy of an enterprise: textbook - PNIPU, Faculty of Humanities, Department of Financial Management, 2011. .Lipsits I.V., Pricing: educational-practical. manual - M.: Yurayt Publishing House, 2011. pricing parametric demand competitor Introduction 2.Pricing methodology 2Parametric Pricing Methods Conclusion Bibliography Introduction In the conditions of market relations, price is the most important economic category, influencing the economic situation of all business entities from individual individuals to enterprises and the state as a whole. Without a well-functioning system of prices and pricing, regulation and self-regulation of the national economy is impossible. One of the decisive ways to increase the competitiveness of a trade organization is the optimal pricing mechanism and the establishment of factors influencing the determination of the price of a product. Price is one of the main parameters of the competitiveness of a manufacturer's products. How correctly an enterprise determines its pricing policy, chooses a pricing strategy, and justifies the market price of its products largely determines its competitive, and therefore economic, position. Therefore, knowledge of the pricing mechanism, methods of setting and regulating prices for manufactured goods predetermine the feasibility of achieving both short-term and long-term financial and economic results of business activity. The purpose of the test: to consider the main methods of pricing. To achieve this goal, it is necessary to solve the following tasks: give the concept of price and pricing; study pricing methodology; characterize the main groups and types of pricing methods. .Price and pricing: concept, essence One of the key elements of a market economy is prices, pricing, the price system, pricing policy and enterprise strategy, etc. In general, price is an economic category meaning the amount of money for which a seller is willing to sell and a buyer is willing to buy a product. In other words, price is the monetary expression of the value of a product. If the terms of the transaction provide for the exchange of one product for another, then the latter becomes the commodity price of the first product. Hence, pricing is the process of setting prices for goods and services. There are two types of pricing: ) market, in which prices are set primarily by producers; ) centralized (state), in which prices are set primarily by special government bodies and institutions. In the real economy of any state (region), both of these types are always used. However, in a market economy the first type of pricing dominates, and in a planned-distribution economy the second type dominates. The market price is formed under the influence of such factors as demand, supply, production costs, competition, and government intervention in pricing processes. In general, market demand for a product determines its maximum price, that is, the one that can be set by enterprises distributing the product (sellers). Gross production costs (the sum of fixed and variable costs) determine the minimum price of a product, the one that manufacturing enterprises can set. The market behavior of competitors, their policies and strategies in the field of pricing, consumer characteristics, the goods they offer and prices for specific products have a significant impact on price formation. The most important factor in market pricing is also government regulation of prices and pricing mechanisms. In general, there are direct and indirect ways of influencing the state on the processes of formation of the price of a product. Direct (administrative) methods are the establishment of a certain pricing procedure for a certain product (product group). Indirect (economic) methods - aimed at changing market conditions, creating a certain situation in the field of finance, currency and tax transactions, wages, etc. In a market economy, price and the processes of its formation occupy one of the main places. This is determined by many factors. For example, price is a significant parameter of the competitiveness of a product. Pricing policy, enterprise pricing strategy, product price are powerful tools of competition. The price of a product determines such economic indicators of the enterprise as income and profit, etc. However, the main thing is that price, by its nature, is capable of implementing a number of important functions, without which the normal existence of an economic system is impossible. 2.Pricing methodology pricing method parametric The methodology is the same for all levels of pricing, which means that the basic provisions and rules for pricing do not change, regardless of who sets prices and for what period. This is a necessary prerequisite for creating a unified price system. But one cannot equate methodology with technique. They differ significantly from each other: based on the methodology, a pricing strategy is developed, and the methodologies contain specific recommendations and tools (tools) for implementing this strategy in practice. It follows that methods are integral elements of a methodology that combine a whole range of price formation methods. There is, for example, a method for determining prices for new types of products, a method for taking into account natural-geographical factors in pricing, etc. Existing methods differ depending on management levels, types of prices and product groups. Each technique has its own characteristics. But these features and differences should not go beyond the requirements of a single methodology. Thus, techniques are the first most important element of methodology. The second important component of the methodology is the principles of pricing. Pricing principles can be implemented only on the basis of the development and application of appropriate methods (techniques). Therefore, principles and methods are closely related and form a methodology. During the transition to a market, the pricing methodology must remain uniform, which will make it possible to gradually form, according to uniform principles and rules, a price system adequate to market relations. Pricing principles are constantly operating basic provisions that are characteristic of the entire price system and underlie it. 3.Calculation methods of pricing 3.1Cost-based pricing methods Full cost pricing method. This method is based on the fact that the price of a product is formed as the total costs of production and sales, which, regardless of their origin, are written off per unit of production. The calculation is usually carried out in tabular form, where cost items and the amount of these costs attributed to a particular product are recorded. As a rule, costs are usually divided into direct, that is, directly and directly related to a given product, and indirect, that is, those that cannot be directly and entirely attributed to a specific product. To assign the latter to the cost of goods, use the method of distribution proportional to labor costs, the ABC method or other special procedures. To implement this method, it is necessary to establish in advance a certain level of profitability for each product (assortment group of goods), which serves as the basis for calculating the amount of profit included in the price of the product. The level of profitability in modern conditions is not regulated by any regulatory documents, and therefore can be established by the management of the enterprise based, for example, on the adopted pricing policy. Thus, the price of a product calculated using this method is the total costs of the enterprise for the production and sale of products plus the desired profit. Hence the second name of this method "cost plus". Its advantages include the following: 1) the basis for determining the price is the manufacturer’s real costs per unit of production, to which is added the profit necessary for business activity; ) it is easy to set a minimum price limit, which is the sum of the total costs of production and sales of products; ) simplicity and consistency of calculations used in budget planning, budgeting, etc.; ) any enterprise has all the information necessary to calculate prices in the form of accounting records, a system of economic and financial plans, and other internal documentation. Along with the advantages, it should be noted the disadvantages of the full cost pricing method, namely: ) individual producer costs do not reflect the socially necessary costs for the production of a given product, and, therefore, the price of a product can differ significantly from its value, both up and down; ) the price calculated using this method in no way reflects market demand, market conditions, consumer characteristics of the product and much more, which is the methodological and methodological basis of market pricing; ) the use of various methods for distributing indirect costs (attributing their share to a unit of production) can significantly affect the value of the total cost of production, and therefore its price; ) the use of the “desired” profitability indicator allows you to vary the profit margin in unlimited amounts, which is also reflected in the price of the product. The use of this method is advisable either for monopolistic enterprises, or in conditions of single (custom) production, or in conditions of acute commodity shortage. Price method of standard (normative) costs. The essence of this method is that for each element of the costs of production and sales of products, standards are established, for example, industry standards, both in physical and in value terms. Price calculation is carried out using the full cost method, but using standard costs. The price calculated in this way can be called standard. Based on the results of the actual production process, deviations of actual costs from standard costs are monitored, which is the basis for adjusting the standard price. In this case, recalculation is carried out only for those cost elements (costing items) for which deviations are recognized as objective. If there are no deviations in other cost items, then the company has the opportunity to change the standard price only by the amount of deviations. The advantages of this method (along with those noted in the previous method) include: ) the ability to manage costs, since the very essence of the method is based on the use of factor analysis; ) more reasonable pricing (it is possible to identify dependent, that is, factors controlled by the enterprise and factors independent of the enterprise); ) standard costs can be adjusted close to socially necessary. The main disadvantages of the standard cost pricing method are similar to the full cost method. Besides: ) continuous monitoring and comparison of standard and actual costs is necessary, which is very labor-intensive; ) a complex element of the standard cost system is the establishment and continuous adjustment of standards for all cost elements. Since the first two methods are closely related in computing technology, their scope of application is identical. Direct cost pricing method. The essence of this method is that the price of a product is formed on the basis of the direct costs of its production, as well as based on market conditions and expected selling prices. In this case, it is assumed that all conditionally variable costs are direct costs that are directly written off per unit of production. Indirect costs are included in the financial result of the enterprise. Therefore, this method is also called the reduced cost pricing method. The calculation is carried out in tabular form. First of all, the expected price of the product, established in the process of analyzing market conditions, is entered into the table. Next, all direct costs are recorded (item by item) for the production of goods. The difference between the price of the product and the total direct costs gives the financial result of the enterprise in the form of an indicator of gross profit (coverage). From here it is possible to calculate the gross profitability indicator as the ratio of gross profit to the amount of direct costs. The concept of this pricing method assumes that all indirect costs of an enterprise should be covered by its gross profit. If, as a result, all costs (both direct and indirect) are covered, and the “desired” profit is obtained, then the original price can be accepted as the estimated market price. Otherwise, either the original price or the amount of indirect costs for the enterprise should be adjusted. In this case, they proceed from the assumption that direct costs are technologically justified, and there is no need to optimize them. The advantages of this method are the following: ) the price of a product is to one degree or another oriented to market conditions; ) gross profit is a calculated indicator obtained by comparing two independent variables - the expected price of a product and the amount of direct costs of its production; ) based on the calculated gross profitability indicator, it is easy to identify the most profitable types of products for the enterprise; ) objective information appears for managing indirect costs. The main disadvantage of this pricing method is that it is based on taking into account direct costs, which are individual for each enterprise, since their value depends on the adopted organization and production technology, relationships with suppliers and many other factors. The scope of application of the direct cost pricing method is single and small-scale production in conditions of fairly developed competition. Price method of standard (normative) direct costs. It is a methodological and methodological synthesis of the second and third cost methods. 3.2Parametric Methods Firms often feel the need to design and develop the production of products that do not replace previously developed ones, but complement or expand the existing parametric range of products. A parametric series is understood as a set of structurally and technologically homogeneous products designed to perform the same functions and differing from each other in the values of technical and economic parameters in accordance with the production operations performed. Standard-parametric methods are methods for setting prices for new products depending on the level of their consumer properties, taking into account cost standards per unit of parameter. This group of pricing methods includes: ) method of specific indicators; ) method of regression analysis; ) aggregate method; ) point method. The method of specific indicators is used to determine and analyze the prices of small groups of products characterized by the presence of one main parameter, the value of which largely determines the overall price level of the product. This method can be used to justify the level and price ratio of small parametric groups of products that have a simple design and are characterized by one parameter. It is extremely imperfect because it ignores all other consumer properties of the product, does not take into account alternative ways of using the product, and also completely ignores supply and demand. The aggregate method consists of summing up the prices of individual structural parts of products included in the parametric series, adding the cost of original components, assembly costs and standard profit. The regression analysis method is used to determine the dependence of price changes on changes in the technical and economic parameters of products belonging to a given series, constructing and aligning value relationships. This method allows you to model price changes depending on their parameters, strictly determine the analytical form of the relationship, and use calculated regression equations to determine the prices of products included in the parametric series. The regression analysis method is more accurate and more advanced among other parametric methods. Linking prices with quality is achieved using economic-parametric techniques and computer technology. The point method is that, based on expert assessments of the importance of product parameters for consumers, each parameter is assigned a certain number of points, the summation of which gives a kind of assessment of the technical and economic level of the product. It is indispensable in cases where the price depends on many quality parameters, including those that cannot be measured quantitatively. The latter include the following qualities: product convenience, aesthetics, design, environmental friendliness, fire resistance, organoleptic properties (smell, taste, color), fashionability. 4Market pricing methods 4.1Consumer-Driven Pricing Methods The method of calculating prices based on the economic value of a product is based on taking into account the magnitude of the economic effect received by the consumer in the event of purchasing a specific product. The procedure for calculating prices using this method consists of the following steps: ) determination of the economic effect associated with the use of goods of this group; ) determination of all parameters that affect the magnitude of the economic effect and are common to all competing products, including the product of a given manufacturer; ) calculation of consumer preferences according to particular parameters of the analyzed goods and assessment of the integral value for the buyer of each product; ) calculation of the indifference price based on the integral value of the differences of all analyzed goods. The method of assessing the maximum acceptable price is used when setting prices for standardized industrial goods, when the main benefit to the buyer is to reduce costs. At the same time, the maximum acceptable price is understood as such a price at which the buyer has zero savings on costs in the process of using the product. The procedure for determining the price of a product using this method comes down to the following calculations: justification of possible options for use and conditions of use of this product; identification of all non-price advantages (benefits) for the buyer when using this product; identification of all non-price costs of the buyer when using the product; setting the price of a product subject to the “advantages-costs” balance. 2Methods focused on characterizing demand for a product The margin-based pricing method is most often used by businesses operating in an imperfect, immature market. A characteristic feature of such a market is the high price elasticity of demand, when even with a slight increase in price, sales volume decreases significantly, and when it decreases, on the contrary, it increases. In this case, the enterprise tries to determine the price in the area where the marginal income and expenses coincide, that is, at the level that ensures the achievement of the highest possible profit. Having found the sales volumes corresponding to this point, the current price of the product is determined from the demand curve. Using the method of determining prices based on limit analysis is associated with certain difficulties: the enterprise must be able to accurately distinguish between fixed and variable costs in order to calculate the marginal values and establish the optimal sales volume; it is necessary to have a sufficient amount of information to accurately construct a demand curve (demand equation); Demand in the market should indeed be mainly influenced by price changes, and the volume of consumption should correspond to the price level. Because of this, the method of determining the price based on the analysis of limits is used quite rarely, since it allows only a certain level of possible price to be established. The method of determining the price based on the analysis of the peak of losses and profits is based on establishing such a volume of production (sales) at a fixed price when the total amount of profit and the total amount of costs are equal. This method of setting prices is appropriate when the pricing policy of an enterprise is aimed at maximizing profits. 3Competition-oriented pricing methods The peculiarity of these methods is that the price of the product is calculated taking into account the competitive situation in the market and the level of competitiveness of the enterprise. The method of following market prices is based on the fact that each seller operating in a given market sets prices for his goods based on the actual current level of market prices and without significantly violating it. If a particular seller enhances the differentiation of his goods in relation to competing goods, then he has the right to set a price that differs from the usual price level in this market. For this reason, this method is usually used if the goods are standardized, for example, cement, sugar, etc. As a result, each seller operates in a special price zone, established by him independently, but taking into account the prevailing price level in the market. It must be remembered that any agreements to agree on price levels are illegal from the point of view of antimonopoly law. The method of following the leader's prices presupposes the presence of an enterprise that dominates a given market, which allows it to dictate market conditions, including in the field of pricing. Then the remaining enterprises secretly determine their prices based on the price level of the leading enterprise. Typically, enterprises that follow the leader in shaping their pricing policy have a low level of competitiveness. Therefore, they have no choice but to keep prices for their products at the level set by the leader. As a result, although competing enterprises do not enter into any agreement on prices among themselves, in practice it turns out that they sell goods at prices that are at a certain, seemingly agreed level, that is, averaging of market prices occurs. In reality, several price levels are not established depending on the competitive position of a given enterprise in the market, its ability and the degree of product differentiation in relation to the goods of the dominant enterprise. In most cases, there is a situation where the prices of each enterprise are limited to certain limits and are not higher than the corresponding prices of the leading enterprise. A pricing method based on customary prices accepted in the practice of a given market. Habitual prices are considered to be prices for a certain group of goods that remain at the same level for a long period of time in a fairly wide market space. A feature of such prices is their high elasticity. A change in the level of usual prices occurs in cases where, for one reason or another, the opinion becomes widespread among buyers and/or sellers that the usual level of quality of a product has changed, its functional properties have expanded, its design has improved, etc. That is, the product is given a new attractiveness and thus transferred to a different price group. Prestige pricing is essentially an analogue of the previous method, with the only difference being that it is used for goods belonging to a special group. There are goods and services that have a higher level of quality, the so-called executive class (jewelry, certain brands of cars, furs, etc.). The main value of these goods is to emphasize the certain status of their owner. If these goods are sold at regular prices accessible to the average consumer, then they will lose their main consumer value - elitism. Therefore, it is not possible to sell them at low prices. In addition, low prices for such goods may raise doubts about their quality, and the effect of exclusivity and special inaccessibility of the product will be lost. Such goods are initially set at increased prices, and thus signal the special status of both the goods and their potential buyers. To successfully apply this pricing method, an enterprise must gain and subsequently continuously maintain the image of an ultra-high-class manufacturer in relation to the goods sold. The competitive (tender) pricing method is used in various types of auctions. A peculiarity of the process is that a large number of buyers seek to buy a product from one or a small number of sellers, or, conversely, when a large number of sellers seek to sell a product to one or a small number of buyers. If the auction was organized by sellers and the competition is between buyers, then the buyer who wrote the highest price wins. If the auction is conducted by buyers and the competition is between sellers, then the seller who sets the lowest price wins. A variation of the competitive pricing method is the auction method of determining prices, which is used in commodity markets, securities markets, etc. When using the raising method of conducting an auction, the lowest price is called first, and then it is raised. The goods go to the one who named the highest price; When using the downward (Dutch) method of conducting an auction, the highest price is called first and if a buyer is not found at that price, then the price is reduced. In this case, the right to conclude a purchase and sale transaction for this product is obtained by the buyer who first accepts the seller’s price and thereby agrees to the highest price compared to other participants in the auction. Many business managers consider competitive pricing methods to be the most effective. This is due to a number of reasons: there is no need to carry out complex analytical calculations that require the involvement of highly qualified workers; the level of business risk that is inevitable when setting your own price is reduced; the price change is not related to the dynamics of its own costs or demand, but is related to the pricing actions of competitors. Conclusion From all of the above, the following conclusions can be drawn: Price is an economic category meaning the amount of money for which a seller is willing to sell and a buyer is willing to buy a product. Pricing is the process of setting prices for goods and services. In a market economy, price and the processes of its formation occupy one of the main places. Pricing methodology is a set of general rules, principles and methods. Namely: development of a pricing concept, determination and justification of prices, formation of a price system, pricing management. All pricing methods can be divided into two groups: calculated and market. The essence of calculation methods of pricing is that they are based, first of all, on taking into account the internal conditions of production at a particular enterprise, without taking into account the requirements of market conditions. A feature of market pricing methods is that the basis for calculating the price is, first of all, taking into account external factors (consumer attitude towards the product, assessment of the competitive situation in the market, etc.). The costs of production and sales of products are considered by the management of the enterprise only as a limiting factor, below which sales of this product are economically unprofitable. Enterprises that use consumer-oriented market methods primarily focus their pricing practices on the consumer’s value perception of their products and on the current level of demand for the product. Bibliography 1.Lev M.Yu. Pricing - M.: UNITY-DANA, 2011. .Vasyukhin O.V., Fundamentals of pricing - St. Petersburg: St. Petersburg State University ITMO, 2010. .Pricing: workshop / G.A. Makhovikova, I.A. Zheltyakova, N.Yu. Puzynya. - M.: Eksmo, 2008 .Belokonskaya E.G., Pricing: textbook / Ivan. state chemical technology University - Ivanovo, 2009 .Dmitriev D. V., Fundamentals of pricing: textbook. manual - Perm: Perm Publishing House. state tech. University, 2010 .Naumov V.V. Pricing - M.: MIEMP, 2010. .Krivtsov A.I., Pricing: textbook (electronic). - Samara: Samara Institute (branch) RGTEU, 2011. .Akhmetova M.I., Pricing policy of an enterprise: textbook - PNIPU, Faculty of Humanities, Department of Financial Management, 2011. .Lipsits I.V., Pricing: educational-practical. manual - M.: Yurayt Publishing House, 2011. Need help studying a topic?
Our specialists will advise or provide tutoring services on topics that interest you. 1) Traditional pricing method (“Cost Plus”)- these are production costs plus profit (manufacturer price and the corresponding premium). In this case, the focus is on costs and, to a lesser extent, on the survey. The result is a standard price, that is, a price limit below which the price may be in exceptional cases. This method is popular: Disadvantage of the method: It is impossible to determine the cost per unit of production until the price of the product has been established, and hence the production volumes. With this pricing method, costs can be calculated using both the full range of costs and a reduced one. Cost calculation for a full item means that costs include direct and indirect costs. With a reduced range of costs, variable (direct) costs are included in costs, and indirect costs are written off, and financial results are covered by gross profit. Method of calculating costs for a complete product range. Method of calculating costs using a reduced nomenclature. Advantages of this method: Having an idea of the patterns of formation of demand for a product, the general situation in the industry, prices and costs of competitors, and having determined its own pricing strategy, the enterprise can move on to choosing a specific pricing method for the product produced. Obviously, a correctly set price must fully compensate for all costs of production, distribution and marketing of goods, and also ensure a certain rate of profit. There are three possible pricing methods: setting a minimum price level determined by costs; establishing a maximum price level generated by demand, and, finally, establishing an optimal price level. Let's consider the most commonly used pricing methods: “average costs plus profit”; ensuring break-even and target profit; setting prices based on the perceived value of the product; setting prices at current prices; "sealed envelope" method; pricing based on closed bidding. Each of these methods has its own characteristics, advantages and limitations that must be kept in mind when developing prices. The simplest method is considered to be “average costs plus profit,” which involves adding a markup to the cost of goods. The amount of the markup can be standard for each type of product or differentiated depending on the type of product, unit cost, sales volume, etc. There are two methods for calculating markups: based on cost or selling price: The manufacturing company itself must decide which formula it will use. The disadvantage of the method is that the use of a standard markup does not allow taking into account the characteristics of consumer demand and competition in each specific case, and, consequently, determining the optimal price. Yet the markup-based calculation method remains popular for a number of reasons. First, sellers know more about costs than about demand. By tying price to costs, the seller simplifies the pricing problem for himself. He does not have to frequently adjust prices based on fluctuations in demand. Secondly, it is recognized that this is the fairest method in relation to both buyers and sellers. Thirdly, the method reduces price competition, since all firms in the industry calculate prices using the same average cost plus profit principle, so their prices are very close to each other. Another cost-based pricing method aims to achieve a target profit (break-even method). This method makes it possible to compare the amount of profit received at different prices, and allows a company that has already determined its profit rate to sell its product at a price that, with a certain production program, would allow it to achieve this task to the maximum extent. In this case, the price is immediately set by the company based on the desired amount of profit. However, to recover production costs, it is necessary to sell a certain volume of products at a given price or at a higher price, but not a smaller quantity. Here, price elasticity of demand becomes especially important. This pricing method requires the firm to consider different pricing options, their impact on the volume of sales needed to break even and achieve target profits, and analyze the likelihood of achieving all of this at each possible price of the product. Pricing based on the “perceived value” of a product is one of the most original pricing methods, with an increasing number of firms starting to base their price calculations on the perceived value of their products. In this method, cost targets fade into the background, giving way to customers’ perception of the product. To form an idea of the value of a product in the minds of consumers, sellers use non-price influence methods; provide after-sales service, special guarantees to customers, the right to use the trademark in case of resale, etc. The price in this case reinforces the perceived value of the product. Setting prices at current prices. By setting a price taking into account the current price level, the company is mainly based on the prices of competitors and pays less attention to indicators of its own costs or demand. It can set a price above or below the price of its main competitors. This method is used as a price policy tool primarily in those markets where homogeneous goods are sold. A firm selling homogeneous products in a highly competitive market has very limited ability to influence prices. Under these conditions, in the market for homogeneous goods, such as food products, raw materials, the company does not even have to make decisions on prices; its main task is to control its own production costs. However, firms operating in an oligopolistic market try to sell their goods at a single price, since each of them is well aware of the prices of its competitors. Smaller firms follow the leader, changing prices when the market leader changes them, rather than depending on fluctuations in demand for their goods or their own costs. The current price level pricing method is quite popular. In cases where the elasticity of demand is difficult to measure, firms believe that the current price level represents the collective wisdom of the industry, the key to obtaining a fair rate of return. And besides, they feel that sticking to the current price level means maintaining a normal equilibrium within the industry. Pricing based on the sealed envelope method is used, in particular, in cases where several firms compete with each other for a contract for machinery and equipment. This most often happens when firms participate in tenders announced by the government. A tender is a price offered by a company, the determination of which is based primarily on the prices that competitors can set, and not on the level of its own costs or the amount of demand for the product. The goal is to win the contract, so the firm tries to set its price below that of its competitors. In cases where the firm is unable to foresee the price actions of competitors, it proceeds from information about their production costs. However, as a result of information received about the possible actions of competitors, the company sometimes offers a price below the cost of its products in order to ensure full production capacity. Pricing based on sealed bidding is used when firms compete for contracts during bidding. At its core, this pricing method is almost no different from the method discussed above. However, the price established on the basis of closed bidding cannot be lower than cost. The goal here is to win the auction. The higher the price, the lower the likelihood of receiving an order. Having chosen the most suitable option from the methods listed above, the company can begin to calculate the final price. In this case, it is necessary to take into account the buyer’s psychological perception of the price of the company’s product. Practice shows that for many consumers the only information about the quality of a product is contained in the price and, in fact, the price acts as an indicator of quality. There are many cases where, with rising prices, the volume of sales, and, consequently, production increases. Methods for calculating prices are very diverse. There are cost, economic and market pricing methods. Let us first consider cost-based pricing methods. Such methods provide the calculation of the selling price of goods and services by adding a specific value to the costs or cost of their production. E. A. Utkin divides this set of methods into: One of the most common is the cost-plus method. This method involves calculating the selling price by adding a fixed additional value - profit - to the production price and to the price of purchase and storage of materials and raw materials. This pricing method is actively used in setting prices for goods in a wide range of industries. The main difficulty in its use is the difficulty of determining the level additional amount, since there is no exact method or form for calculating it. Everything changes depending on the type of industry, season, and state of competition. The level of added amount to the cost of a product or service that suits the seller may not be accepted by the buyer. Costs are calculated for a specific unit of production, and then average costs are determined, consisting of average fixed costs and average variable costs. Marginal costs are also determined, which make it possible to estimate the limits of changes in costs per unit of production in relation to the growth of production and sales volumes. Many managers prefer to set a relatively high initial price for a product being promoted to the market in order to quickly recoup the costs incurred at the stage of its development and introduction to the market, when sales volumes are relatively small. However, as sales volumes increase, production and sales prices decrease, while at the same time efforts are intensified to optimize distribution channels to minimize losses when organizing mass sales. Another method is minimum cost. This method involves setting prices at a minimum level sufficient to cover the costs of producing a specific product, rather than by calculating total costs, including fixed and variable costs of production and distribution. Marginal cost is usually defined at the level at which it would only be possible to recoup the amount of the minimum cost. Selling a product at a price calculated using this method is effective in the saturation stage, when there is no sales growth, and the company aims to maintain sales volume at a certain level. Such a pricing policy is also rational when conducting a campaign to introduce a new product to the market, when one should expect a significant increase in sales volumes of the specified product as a result of offering it at low prices. Good results can be achieved when selling at low prices can lead to active expansion of sales, and this gives sufficient profit to the company due to the scale of sales. But, if the technique in question is used ineptly, the company faces losses. Since prices are determined by suppliers of goods, market demands and the state of competition are not always taken into account. In addition, despite the low price level, consumers often refuse to purchase this product. The next method is price markups. Calculation of the selling price in this case is associated with multiplying the production price, purchase price and storage of raw materials and materials by a certain added value coefficient according to the formula: Unit cost = selling price * (1 + multiplying factor). The specified ratio is determined by dividing the total profit from sales by the cost. It is also possible to calculate this ratio by dividing the total profit from sales by the sales price. Another method is target pricing. Otherwise, this method is called the method of determining the target price or determining the price in accordance with the target profit. On its basis, the cost per unit of production is calculated, taking into account the sales volume, which ensures the target profit. If the cost is transformed due to a decrease or increase in production capacity utilization and sales volumes, indicators of the degree of production capacity utilization are used, taking into account the impact market conditions and other factors, after which they determine the selling price per unit of production, which under these conditions would provide the target profit. But with this method, the price is calculated based on the interests of the seller and does not take into account the buyer’s attitude to the calculated price. Hence, this method needs some adjustment to take into account whether the intended buyers will purchase the product at the estimated price or not. Market pricing methods include: Current price method. In cases where costs are difficult to measure, some firms believe that the current price method, or the price typically received for a product in the market, represents the result of the joint optimal decision of the enterprises in the industry. Using the current price method is especially attractive for those firms that want to follow the leader. This method is used primarily in markets for homogeneous products because a firm selling homogeneous products in a highly competitive market has limited ability to influence prices. In these conditions, the main task of the company is to control costs. In an oligopoly, firms also try to sell their goods at a single price. The sealed envelope method, or tender pricing, is used in industries where several companies are in close competition to win a particular contract. When determining a tender, they are based primarily on the prices that competitors can set, and the price is determined at a level lower than theirs. However, if a product has some qualities that distinguish it from competing products, or is perceived by customers as a different product, its price can be set flexibly, without paying attention to the prices of competitors. Market methods of price formation also include the price determination method, which is focused on finding a balance between production costs and market conditions. Economic pricing methods include the following methods: The method of specific indicators is used to determine and analyze the prices of small groups of products characterized by the presence of one main parameter, the value of which largely determines the overall price level of the product. The regression analysis method is used to determine the dependence of price changes on changes in the technical and economic parameters of the product. The point method is that, based on expert assessments of the importance of product parameters for consumers, each parameter is assigned a certain number of points, the summation of which gives a kind of assessment of the technical and economic level of the product. The aggregate method consists of summing up the prices of individual structural parts of products included in the parametric series, adding the cost of original components, assembly costs and standard profit.
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