Page 291 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers Pooja, Lovely Professional University

Notes Unit 14: Pricing Decision

CONTENTS
Objectives

Introduction
14.1 Objectives

14.2 Types of Pricing Decisions
14.3 Factors Affecting Pricing Decisions
14.4 Methods of Pricing

14.4.1 Full Cost Pricing
14.4.2 Variable/Marginal Cost Pricing
14.4.3 Rate of Return Pricing

14.4.4 Break-even Pricing
14.4.5 Minimum Pricing
14.5 Transfer Pricing

14.6 Summary
14.7 Keywords

14.8 Self Assessment
14.9 Review Questions
14.10 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the concept of pricing decisions
Describe the objectives and types of pricing decisions
State the factors affecting pricing decisions

Explain the methods of pricing decisions
Define transfer pricing

Introduction

Pricing which is part of the overall marketing strategy plays a very critical role in the success of
a company as it is able to increase the profitability and or increase the market share.
Normally, the higher the prices means higher profit being attained but might means lower
market share. Pricing ties very closely with the various stages of a product life cycle. Under
normal circumstances, selling price is based on total cost, i.e., production, administration and

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