What are the differences and connections between cost, demand and competition-oriented pricing methods?

The first and most basic pricing method-cost-oriented pricing method, also known as accounting pricing method.

Method is a pricing method based on the unit cost of products to set the most favorable price for enterprises. It is the first method to be considered in enterprise pricing. Cost is the actual consumption in the production and operation of an enterprise, which objectively requires compensation by selling goods in order to obtain income greater than its expenditure, and the excess is manifested as enterprise profit. As the most commonly used and basic pricing method for Chinese and foreign enterprises. Its advantages are obvious: the calculation method is simple and easy, and the data is easy to obtain. It can ensure that all the costs of the enterprise are compensated and normal profits are obtained. Conducive to maintaining price stability. When the demand increases,

The product price will not increase, but the fixed bonus can make the enterprise get higher profits. Enterprises in the same industry can reduce or avoid price competition as long as the bonus ratio is close and the set price is close. It is fair to both buyers and sellers, the seller can get normal profits, and the buyer will not feel extra exploitation. It is widely used in leasing, construction, service, scientific research project investment and wholesale and retail enterprises. At the same time, many enterprises take the price set in this way as a reference. Of course, no matter how perfect the method is, there will be some shortcomings due to various factors such as market changes. The main disadvantages are as follows: as a seller-oriented pricing method, it ignores the change of product demand elasticity and cannot adapt to the rapidly changing market requirements. Ignoring the change of product life cycle and lacking due competitiveness are not conducive to enterprises to participate in competition. It is not conducive to enterprises to reduce product costs, easy to cover up abnormal operating expenses, and not conducive to enterprises to improve efficiency. Price is a subjective forecast based on sales volume, which reduces the scientificity of price setting.

Second, the competition-oriented pricing method, popularly speaking, is to price according to the price of competitors-it can be the same, it can be high or low. The price adjustment mainly depends on whether the competitors change, and pricing with the market.

This method mainly considers the competitiveness of product prices in the market. With the pricing and market analysis made by competitors, it is conducive to stand out in a completely competitive market. However, this method pays too much attention to price competition, easily ignores the competitive advantages that other marketing combinations may cause product differentiation, easily causes competitors to retaliate, leads to vicious price reduction competition, and makes the company unprofitable. However, in fact, it is impossible to accurately estimate the price changes of competitors.

Third, customer-oriented pricing method, also known as demand-oriented pricing method and market-oriented pricing method, refers to a pricing method in which enterprises determine product prices according to market demand and different reactions of consumers. Customer-oriented pricing method makes flexible and effective use of price differences. For the same product with the same average cost, the price changes with the change of market demand, which better adapts to the market economy. However, this method needs to determine the consumer's perception value of different products, which is difficult to measure and time-consuming and laborious.

Conclusion:

Cost-oriented pricing, competition-oriented pricing and demand-oriented pricing are quite different in simplicity, risk, speculation and upfront investment. But everyone has his own value and applies to different commodities. In the realistic market economy, we can't stick to one pricing method. We should combine the actual situation and adopt a variety of complementary pricing methods to better adapt to the market.