Product Costing and Product Pricing Practices

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Ingenbleek, Paul, Debruyne, Marion, Frambach, Ruud and Verhallen Theo. “Successful New Product Pricing Practices: A Contingency Approach.” Marketing Letters 14:4. (2003): 289-305.

Introduction

The pricing research in new product performance was mainly centred on normative strategies, and customer’s price and value judgments. Previous studies show that organisations fix new product prices by ascertaining consumer elasticity and competition intensity and also fix a price that maximizes returns. Pricing practice is a complex process and should be well-coordinated and adequate resources allocated. Pricing practices are a process executed by a firm’s management, which results in a price decision. Pricing practices involve; price modifications, price bundles, and price limits along a product line.

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Discussion

The hypothesis base is from Monroe’s (1990) theoretical approach to pricing. According to this concept, an organisation may choose a price between the maximum limit that is fixed by the relative value of the good or service and the minimum limit that is fixed by costs. Relative product benefit and competition propensity can alter the mode of the price judgment and complicate more the pricing strategy. By using the appropriate pricing practice having the product and market situation, can result in better pricing decisions and hence new product marketing.

Conclusion

The aim of the research is to find out the achievement and incidences to achievement of new product pricing practices. The research examines the impact of pricing practices on a new product’s success or failure. New product performance weighs the accomplishment of the new good or service in the market after it is launched. The research centers on three pricing practices, which are founded on the basis of value-informed pricing, competition-informed pricing and cost-informed pricing.

Anderson, James, James, Thomson and Finn, Wynstra. “Combining Value and Price to Make Purchase Decisions in Business Markets.” International Journal of Research in Marketing, 17. (2000): 307–329. Print.

This focuses on the retail pricing strategies in those businesses in Dubai using. In Dubai, there are a lot of influences that affect the revenue or profitability and the bottom line of the retailers. Therefore, it is crucial that businesses have an efficient mode of setting the price right without overpricing the product or underpricing it and running the business into losses. However for the retailers to effectively say the right price, there are several factors that they should put into consideration.

Discussion

Retailers should put into consideration the costs of products such as the incurred cost of the stocks, transportation of goods costs, and all other business expenses. In addition to the costs of goods, expenses are the overhead expenses. These are expenses that are not directly related to the production costs but are incurred in the running of the business such as wages, office provisions and advertising costs.

Conclusion

When setting the price of a product, retailers should always ensure that the final price factors in all the costs incurred in the production of the product and the overhead that the business incurs. By doing so, the business will be able to break even and furthermore, they will be able to gain more revenue at the end of the day.

Homburg, Christian and Christian, Pflesser. “A Multiple-Layer Model of Market-Oriented Organizational Culture: Measurement Issues and Performance Outcomes.” Journal of Marketing Research, 37. (2000): 449–462.

This article looks at the various techniques that businesses use in setting the price of different products. In addition, the article takes into consideration the different environments that businesses in Dubai face in their production of products.

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Discussion

The Dubai business uses a markup pricing strategy which includes the markup on cost and markup on retail. It is important for retailers to have the initial markup set high in order to ensure that all the costs of production are factored in and also be able to absorb any cost changes in the market. In addition, there are other pricing strategies, which include, vendor pricing, competitive pricing and psychological pricing. The pricing strategy that the retailers will opt for will be determined by the products’ expected returns and the current business conditions in the Middle East.

Conclusion

There are various types of pricing strategies used in business. The type of strategy that a business chooses will depend on the type of business and the current economic conditions facing business in the region. Also, the size of a company will influence the type of strategy a business is to adopt.

James, Pigott. “Product cost management empowers cost control.” The economic journal of business. (2008): 102-123.

Introduction

This article studies the various factors that influence product costing systems. This article also highlights various studies done earlier that focused on adoption or non-adoption techniques used to depict the character of product costing systems.

Discussion

This research does not use the adoption or non-adoption technique in determining the product cost but instead uses four other different techniques in order to show the characteristics of product costing systems. Thus, this technique will allow for analyzing and testing the relationship between the variables which can be predicted and the cost system sophistication. Higher sophistication levels are got from having efficient information on costs, effective management accounting standards, healthy business competition, and the use of JIT approach techniques.

Conclusion

Adoption or non –adoption techniques do not effectively conclude the influence it has on the product costing practice. In addition, it did not show the relation it had to the ABC adoption whose fundamental principles were important for the application of good product costing g technique. However, the article used four proxy measures in determining the best production practices for a business to adopt.

Colin, et al. “Product Costing Practices in Different Manufacturing Industries: International.” Journal of Management Article. (2007): 187-203.

Introduction

This article analyses the management accounting practices used in the Middle East and how they affect the different product costing techniques of a business.

Discussion

The article compares the product costing techniques across various different businesses and addresses the inadequacies of the technique. However, there are major differences in the application of various product costing methods. This is because all businesses expect to incur profits therefore they all have embraced efficient and effective accounting practices that factor in all costs and expected variables hence making their product pricing technique very efficient.

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Conclusion

All businesses within the Middle East region have effective management accounting techniques that have adopted efficient product costing techniques which have made it possible for a business to break even and even have higher returns at the close of the business. Hence good management accounting practices have a direct effect on the method that the business will use in applying its product costing technique.

Final Conclusion

From the studies undertaken in the articles on various business organizations across the Middle East, product costing proves a vital process for the success of the company. By undertaking product costing, a company will be able to break even and ensure that the companies’ profitability is assured. In addition, product costing practices will enable a business to control its expenses, therefore, ensuring that operating expenses do not surpass the expected limits or set markup limits. In spite of the pricing strategy that the retailers used in their businesses, they should ensure that it adds up all the costs and therefore should be more than the total expenses. By so doing, a retail business will effectively cover all the operating expenses incurred in the business. There are various strategies a person could use in determining the best retail price for a given product or service. In Dubai, there is a lot of competition in doing business therefore the retailers, apart from factoring in the costs of production, will also put into consideration the price that another competitor is offering for the same kind of goods. In addition, they will also look at the channels of distribution existing in Dubai. Due to the dynamics of Dubai business, there are retailers who will normally use pricing strategies that suit the mode of their business. In addition, a company should adopt product practices that suit its mode of operation and also have effective management accounting techniques which will ensure that effective product pricing techniques are adopted into the business.

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BusinessEssay. (2022, February 24). Product Costing and Product Pricing Practices. Retrieved from https://business-essay.com/product-costing-and-product-pricing-practices/

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"Product Costing and Product Pricing Practices." BusinessEssay, 24 Feb. 2022, business-essay.com/product-costing-and-product-pricing-practices/.

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BusinessEssay. (2022) 'Product Costing and Product Pricing Practices'. 24 February.

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BusinessEssay. 2022. "Product Costing and Product Pricing Practices." February 24, 2022. https://business-essay.com/product-costing-and-product-pricing-practices/.

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BusinessEssay. "Product Costing and Product Pricing Practices." February 24, 2022. https://business-essay.com/product-costing-and-product-pricing-practices/.