Price Mix
Price is a very sensitive components of marketing mix. Decision on selling price, discount, commission rate etc. are taken under it. It is the exchange value which a buyer pays for product or service. The price of product is one of the elements which generates revenue.
The manager of the organization must determine the reasonable price that must influence to the customers to purchase the goods and services.
Price must satisfy both the buyers and suppliers.
If the price is very high or low, it will affect the demand and supply of the product.
Price mix includes list price, discount, credit terms, payment periods, allowance etc.
List price: It is the main components of price mix. List price is the print value or face value of a product. All products have their own price or exchange value.
Discount: It plays a vital role in sales promotion. It attracts customers and maintain long-term relationships .It may be trade discount and cash discount.
Allowance: It is a type of pricing strategy engaged with the promotion of the product. Organizations mostly attached different rewards and benefits for their customers like bulk purchase. It is important tools of sales promotion which attracts retailers.
Credit terms: It is an agreement between buyer and seller about the timings and payment to be made for the goods bought on credit. Credit terms may be long-term,short-term, lower discount rate etc. For example: the credit terms might be 2/10 net 30. This means the amount is due in 30 days, however, if the amount is paid in 10 days a discount of 2% will be permitted.
Payment periods: It is payment time duration for customers. Short time period is favorable for firms and long payment period is favorable for customer.