What price calculation models exist?
Products can be priced in many ways. Below you can find an overview of the most common methods (more can be found on Wikipedia):
- Cost-based pricing: The product is priced based on its actual costs. The price covers both the variable and fixed costs, plus a certain margin.
- Value-based pricing: The product is priced based on the value the consumer perceives. This pricing strategy is especially useful for luxury goods where the actual costs of creating the product is much lower.
- Location-based pricing: Based on the location, the price can change as the video below illustrates for a can of Coca-Cola.