Unit V - Thinking Globally: (Changes in Pricing)

Republic of the Philippines
NUEVA ECIJA UNIVERSITY OF SCIENCE AND TECHNOLOGY

Cabanatuan City, Nueva Ecija, Philippines
ISO 9001:2015 CERTIFIED
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Unit V . Thinking Globally

(Changes in Pricing)
A Final -Term Requirement

for Services Marketing (Elective 13)
Pareña , Mikaela Faye V.

BSBA MM 4A
Transforming Communities through Science and Technology

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UNIT V. Changes in Pricing
Overview
The study focuses on the idea of thinking globally as well as knowing the changes in
pricing . It will help the students to understand the concept how the price changes .
Lesson Objectives
At the end of the unit, I am able to:

▪️ To identify what is changes in pricing.
▪️ To explain how price changes work .
▪️ To understand how to increase prices without offending existing customers.
▪️ To know the importance of price changes.
Lesson Proper
Definition of Changes in Price
A price change in the stock market is a shift in the value of a security or another asset to either
a higher or lower level. The term also refers to the difference between a stock's closing price on a
trading day and its closing price on the previous trading day.Price changes over a period provide
the investors and traders with relevant and crucial financial information. It helps them determine
the favorability of the prevailing market conditions and make trading decisions accordingly.
Moreover, shifts in prices can be estimated for different durations of time, ranging from a day to a
year. The price change is the price movement from a certain position to a higher or lower value.
The stock price change is an important indicator of a company’s financial status .

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How Price Changes Work
Although it can be computed for any length of time, the most commonly cited price change in the
financial media is the daily price change, which is the change in the price of a security from the
previous trading day's close to the current day's close.Equity analysts also commonly consider
year-to-date, and latest-12-month price changes when analyzing a company.
Predicting Price Changes
The price change is a core component of financial analysis. Predicting price changes can be as, if
not more, important than the change itself. Price change forms one of the two factors that comprise
the total return from an investment over a period of time. The second factor is any dividends or
distributions obtained from the investment.
When discussing price changes in the market, it's important to consider "price change" in context,
whether it be time frame—daily, year-to-date, and latest-12-month price changes, or type—
percentage, absolute, or net. There are numerous metrics in investment analysis that involve price
change—such as the price-to-earnings ratio (P/E ratio) in fundamental analysis and the rate-of-
change indicator (ROC) in technical analysis.
Percentage Price Change
The percentage price change is generally the norm for computing asset performance. It is important
to remember that percentage-based price changes are useful only in the context of the number of
dollars at play. A 75% change in the price of a box of cereal, for example, may only involve a few
dollars while a 75% change in the price of Berkshire Hathaway may involve thousands of dollars.
Absolute Price Change
For shorter intraday periods, an absolute price change may be used by momentum and algorithmic
traders as the basis for trading and arbitrage strategies.
Net Change
Net change is the difference between a prior trading period’s closing price and the current trading
period’s closing price. For stock prices, the net change is most often referring to a daily time frame,
so the net change can be positive or negative for the day in question.

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Getting prepared for a pricing change
In the beginning, we mentioned a two-fold problem most businesses have with pricing: not putting
enough thought into it, and never changing it. If you decide to change your prices regularly, you
can't ignore the first problem. Pricing changes are a fantastic growth lever, but only when great
care is taken when pulling that lever. Below are some tips to help you prepare for your change in
pricing.
Know your market, do your research
Market research and analytics is where you'll likely spend the most time. In fact, if there are too
many people involved in the process, you can get caught up in a feedback loop that forces this step
to take longer than it should. Setting deadlines is a good way to help prevent that and avoid hitting
what we call "analysis paralysis." Five weeks or so is a good target for this step in the process. As
you begin to regularly change and optimize your pricing, you'll find that much of the market
research you've already completed can be reused along with updated research reflecting new
pricing changes.
Use value-based pricing
You may know that we have a bias toward value-based pricing, particularly for SaaS companies,
but not without merit. Value-based pricing is highly effective because it's based on what your

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target customer is willing to pay—it's based on what they think it's worth. Value-based pricing
allows you to be able to price higher than your competitors, continue improving your product, and
because of the consistent communication you're having with your customers, you're building
aimpact relationships. And all this can translate into higher retention.
Check in with what existing customers think
Customers aren't usually going to be thrilled about a price increase, but many of them will be
honest if you ask them about the value your product brings them. Customers also appreciate
honesty and directness. Don't use open-ended questions. Ask them direct questions about your
biggest concerns, as well as what questions they have. Understanding how your actual customers
think or feel is crucial. This is also best accomplished by choosing a select group of your
customers, rather than blasting out a survey to all of them.
Understand the impact of your new pricing
You can implement legacy pricing with existing customers, so they're not affected by the new
pricing. But it's still a good idea to run an analysis to see how existing customer segments would
be impacted by higher prices. If you notice that one customer segment is hit especially hard by the
price increase, be sure to reach out to them and maybe offer a transition discount to ease them into
the pricing change. This can also help ensure that the pricing structure you've settled on is indeed
the correct one.
Build a communications plan for your price increase
Price changes can be confusing and frustrating for your customers, so it's crucial to have a
communication plan in place. Giving your customers as much information as possible right from
the beginning when it comes to increasing prices, and giving them resources to find out more on
their own is vital. But you must also ensure that support staff and anyone else who deals with
customers fully understands the new pricing, so everyone is communicating the price change
honestly, effectively, and correctly.
How to increase prices without offending existing customers
One of the biggest reasons companies don't change prices regularly is that they're afraid that raising
prices will offend their existing customers. What if you raise prices and all your customers leave?
As long as you're using value-based pricing and checking in with existing customers as part of the

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feedback process, your new prices are likely to still be something your customers are willing to
pay. Still, there are steps you can take to soften the impact of any pricing changes.
* Know your customer segments — Different customer segments will likely have different price
sensitivities. Which of the methods below are appropriate will depend on the customer segment.
Therefore, understanding those segments is vital to getting the right method.
* Offer legacy pricing to your early adopters — Legacy pricing means that customers are
guaranteed the price will not increase for the same product. This is typically offered to customers
that may be more sensitive to a price increase.
* Offer VIP discounts based on customer segment — An alternative to legacy pricing is to

offer transition discounts to certain customer segments. Discounting would apply for a number of
months after the price change, and then expire. The conditions and timing of the discounts must
be clearly communicated. Promotional pricing helps customers feel rewarded for their loyalty.
* Set timeline expectations with customers for price changes — Changing your prices should
be something that you do regularly but appropriately. The pricing change could come
automatically after a given number of months, or it could come as new features are rolled out.
Whatever the schedule, clearly setting those expectations will help eliminate shock and pushback
from customers.
* Communicate with clarity and stick to your decision — Every aspect of the price change
should be communicated clearly and in advance. More importantly, once you've made the decision
to change the current pricing, you should not reverse it. If you've done the proper research and
preparations, then you have what you need to support your decision, which will help you easily
communicate the changes and why you're making them, to your customers
Why Price Changes Are Important?
A security's price likely is the most visible barometer of an issuer's financial health. Companies,
their management, shareholders, and investment banks are some of the constituents that care about
changes in securities' prices. So, whenever a stock's price increases or decreases, you can be sure
that management teams and others, will be watching it closely. Naturally, they want their stock to
perform well because they're in the business of making money. Here are some more reasons to
care:
* The stock price is often an early indicator that market participants are either happy or worried
about an issuing company's prospects.

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* A company's stock price reflects investors' perception of its ability to earn and grow profits.
* If shareholders are happy and the company is doing well, as reflected by its share price, the
current management likely would remain with the company and receive bonuses.
* A company also might be concerned with its stock price because it fears a takeover; an acquiring
company might pursue a takeover if it believes that the target company is well priced.
* If a company and its stock price are performing well, the company likely would receive more
favorable press from analysts and the media.
Summary
Price change refers to the difference between a security's closing price on a trading day and its
closing price on the previous trading day. Changing the price is not just about wanting to change
it a lot of data consider changing for the it to work. When changing the price you need to consider
your customer by knowing your customer segments , offer legacy pricing to your early adopters ,
offer a discount and communicate well. Changes in price is not easy you need to have strategies
for it to work.
References

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https://www.google.com/url?q=https://www.profitwell.com/recur/all/pricing-
change/&sa=U&ved=2ahUKEwjQj5TjkdL6AhVUmuYKHX2XC1MQFnoECAwQAg&usg=A
OvVaw0qdmlJYzlu5oYBcDy3fjXi
https://www.google.com/url?q=https://www.investopedia.com/terms/p/price-
change.asp&sa=U&ved=2ahUKEwiJyvCmk9L6AhXVT2wGHZCRAH4QFnoECAAQAg&usg
=AOvVaw3d-w7Ezqyhn0UZIxcOlTck
Activity
Name: Score:
Course/Year/Section: Date:
True or False
Direction: Write true if the statement is correct and false if it is incorrect.
1. Equity analysts also commonly consider year-to-date, and latest-6-month price changes when
analyzing a company.
2. A price change in the stock market is a shift in the value of a security or another asset to a lower
level .
3. If a company and its stock price are performing well, the company likely would receive more
favorable press from analysts and the media.
4.Price changes can be confusing and frustrating for your customers.
5. One of the biggest reasons companies change prices regularly is that they're they offend their
existing customers.
6.A company's stock price reflects investors' perception of its ability to earn and grow profits.
7. Changes in price need a lot of time.
8. Every aspect of the price change should be communicated clearly and in advance
9. Customers also appreciate honesty and directness.
10. . If you decide to change your prices regularly, you can ignore the first problem.

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Answer Key
1. false
2.false
3.true
4.true
5.false
6.true
7.true
8.true
9.true
10.false

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Republic of the Philippines

NUEVA ECIJA UNIVERSITY OF SCIENCE AND TECHNOLOGY

SAN ISIDRO CAMPUS