-How does ebay price their service? Is it an effective method of pricing?
Pricing as per buyer/seller perspective:-
eBay started their business on the concept of bidding for products that are listed on their website. In the bidding pricing eBay asks seller to list a product on their website for a base price that seller can afford to sell for. After setting up the base price a seller selects the duration for which the product should be listed on the website. Once the product is listed with appropriate categories it reaches out to the buyers and then buyers quotes bid for the listed product.
After the expiry of auction for a particular product the product is sold to the most suitable ...view middle of the document...
It creates a virtual market for the transactions. eBay follows the Auction method for pricing which is very effective as large number of customers can bid for the desired platform and it helps to create fair opportunities for seller and buyer both .
-Do we price products and services in different ways?
Every product category is different from the other and hence the pricing also differs according to product life cycle, brand name, and customer segments. Hence marketers need to develop different pricing strategies for different products.
Mark-up pricing:- the most elementary pricing method is to add a standard mark-up tp the product’s cost. This is used by manufacturing companies.
Mark up price=
Unit Cost1-desired returns on Sales
Target- return pricing:- the firm determines the price that yields its target rate of return on investments. Public utilities, which need to make a fair return on investments use this method.
Target Return pricing = Unit cost+ Desired return*Invested capitalUnit sales
Perceived- Value pricing:- an increasing number of companies now base their price on the customer’s perceived value. Perceived value is made up of host of inputs such as the buyers image of the product performance, the channel deliverables, the warranty quality, customer support and softer attributes such as suppliers reputation, trustworthiness and esteem, companies must deliver the value promised by their value proposition and the advertising sales force and the Internet, to communicate and enhance perceived value...