WHAT’S IN A PRICE?
Why did Apple select $579 as the retail selling
price of the Apple iPad
Air Retina tablet?
IMPLEMENTING AUTOMATED RETAIL: PRICE
PRICE
The cost of a good or service
o an exchange (typically a monetary exchange) in order to obtain
something
• The price of goods and services is established to fulfill a
successful exchange process with the customer.
o Customer perspective: price is what must be given up in order to
get something that they want
o Seller perspective: price is revenue that is gained for a product
that leads to profit for the seller
IMPLEMENTING AUTOMATED RETAIL: PRICE
PRICING DECISIONS
• Making good pricing decisions is critical to the success
of the business.
o If a product is priced too high or too low, it can create a loss for
the business.
• The term price is used interchangeably with the term
cost—however, the two are very different.
o Price is what a customer pays a seller—usually a retailer.
o Cost is what the seller incurs (which may include cost of
production) to obtain the product.
IMPLEMENTING AUTOMATED RETAIL: PRICE
PRICING DECISIONS
• Internal Factors: are within the control of the
business or can be altered by the business.
o cost of goods, operating expenses, product mix
• External Factors: occur outside of the business
operation and cannot be controlled by the
business.
o supply and demand, government regulations,
competition, natural and economic events
IMPLEMENTING AUTOMATED RETAIL: PRICE
PRICE TO MAKE A PROFIT
• Retailers and School Based Enterprises need to have
a clear understanding of all of their costs involved.
o The business must understand additional costs to the
retailer to sell the product through the automated retailing
system.
• Automated retailing kiosks have additional costs of
doing business.
o leasing fee
o credit card processing fee
o specialized packaging and labels
IMPLEMENTING AUTOMATED RETAIL: PRICE
FEES AFFECT PRICING
• Leasing fees
• Credit card processing fees
• Specialized packaging and labels
IMPLEMENTING AUTOMATED RETAIL: PRICE
ACTIVITY
Pricing Products for the
Automated Retailing Kiosk and SBE
IMPLEMENTING AUTOMATED RETAIL: PRICE
PRODUCT
Internal Factors
External Factors
Pricing Decision
based on Internal and
External Factors:
NIKE polo;
custom
embroidered
with school
mascot
Cost of item: $25 each
Boosters online
selling price for
similar NIKE polo:
$45
Total cost of goodsincluding packaging and
credit card processing
fee: $25.22
Price of other
school stores in
our district-:$40
Company Objective: 50%
markup on apparel
Packaging for Spirit
Box: $.20
Credit card processing
fee for Spirit Box: 2%
of all credit card
purchases
Company goals/profit
objectives
Retail price: $39
Target market brand
awareness
IMPLEMENTING AUTOMATED RETAIL: PRICE
ACTIVITY
Pricing Spirit Factory Products for Automated
Retailing
IMPLEMENTING AUTOMATED RETAIL: PRICE
QUIZ
Pricing Products and Considerations for
Automated Retailing
IMPLEMENTING AUTOMATED RETAIL: PRICE