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Bambang Irawan
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u Price is one element of the mix

marketing or marketing mix
can generate income,
where the other elements get
costs (Kotler, 2009)
u Price is part of the elements
marketing mix, namely price, product,
channels and promotions, namely what
known as the four Ps (Price,
Product, Place and Promotion).
u Price for a business/business entity
generate income (income),
u Other marketing mix elements
namely (product), Product Place
(place/channel) and Promotion
(promotion) incur costs or
burden that must be borne by a person
business/business entity.
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Price is an expenditure or sacrifice that must be made by

consumers to get the desired product to meet the
consumer's needs.

For entrepreneurs/traders, prices are easiest to adjust to

market conditions, while other elements such as product,
place and promotion require more time and length to be
adjusted to market conditions, because prices can provide
an explanation to consumers regarding the quality of the
product and the brand of the product. (Nuryadin, n.d.)
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u In economic theory, the meaning of price, value and utility

is the most related concept.
u Utility is an attribute attached to an item, which allows the item to fulfill
needs, desires and satisfy consumers (satisfaction). There is value
which is the value of a product to be exchanged for another product.

u This value can be seen in barter situations, namely the exchange of

goods for goods. Currently, our economy no longer barters, but uses
money as a measure called price.

u So price is the amount of money used to assess and obtain products and
services needed by consumers (Alma, 2005)
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PRICE:
an amount of money and/
or something else along
with its benefits is needed
to obtain a
product (Etzel et al.,
1997).
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1. Economic conditions
2. Supply and demand
Factors can 3. Elasticity of demand;
influence 4. Competition;
hi price
occurrence: 5. Cost;
6. Company Objectives;
7. Government supervision.
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Factors that influence it, both directly

and indirectly:

Direct factors: a. raw material Indirect factors

prices, a. the price of similar products sold by the
b. production costs, competitor,

c. marketing costs, b. Prices of substitute products and products

complementary, as well
d. government regulations, and
c. discounts for dealers and
e. other factors. consumer
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Estimating demand for goods:

(a) Determine the expected price , namely
the price that consumers are expected to accept
found based on estimates.;
(b) Estimate sales volume at various levels

Know in advance the reaction in competition

(Price competition and substitute goods)

Stages Other goods produced by other companies that equally want

consumers' money
Determination
Price Pricing strategy

Consider the company's marketing politics

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The FILTERING PRICING (SKIMMING

PRICE): This strategy takes the form of setting prices
pricing want to reach as high as possible. Wisdom
This aims to cover research costs,
strategy development and promotion.
used
by the
PENETRATION PRICING (PENETRATION
PRICE): Penetration pricing is
company lowest possible pricing strategy
to reach the to achieve relative sales volume
short. This strategy tends to be more beneficial
appropriate compared to filter pricing
target market, namely: (skimming) if this condition exists in the market.
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Dharmesta, n.d
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Choosing a Pricing Method

Price determination methods: a.

Competition-oriented pricing; b. Demand or customer-
oriented pricing.
c. Cost-oriented pricing;

Cost-oriented pricing methods, such as: 1. Mark-up or cost-plus

pricing methods; 2. Rate-of-return or target return
pricing method; 3. Break-even pricing method; 4. Variable cost
pricing.

Dharmesta, n.d
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The selling price is determined by dividing costs

with one minus the percentage mark-
up

1. Determination method
mark-up price or
Selling Price = Product Cost + Mark Up
cost-plus;
= Product Cost + (% x Product Cost)
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2. Rate-of-return or target return pricing method;

Rate-of-return or target return pricing method Pricing

policy to achieve rate of return on investment is a policy that is widely used
by large companies.

The two main factors for carrying out this procedure are: a) Estimated
demand; b) Use of
facilities;
Dharmesta, n.d
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The method used to determine the price of each product can be shown as product X which was mentioned
above.
For example, it is known
that: a) Factory capacity = 100,000
units b) The expected capacity to be achieved is 70%,

So the company must estimate that demand is at least 70,000 units (or 70% x 100,000 units).

Then the next stage is to add a profit margin to these costs so that
the planned return on investment can be achieved. If it is known that: a) Return
according to tax = 14% (expected) b) Investment = IDR
250,000,000.00 (for supplies and facilities). c) Tax = 50% d) Number
of units to be
sold = 70,000 units.

So to determine the selling price we must first determine the amount of profit (50% is taxable and the
other part is to cover the investment) with the following calculation: 1. Return on
investment = 14% x IDR 250,000,000.00 = IDR 35,000,000.00 2 . The
portion of profit that is subject to tax and that is used to cover investments = 100/50 x IDR 35,000,000.00 =
IDR 70,000,000.00
3. Total costs = 70,000 units x IDR 3,214.00 = IDR
224,980,000.00 4 . Total income = IDR 70,000,000.00 + IDR 224,980,000.00 = IDR
294,980,000.00 5. So, the minimum selling price per unit = IDR 294,980,000.00 : 70,000 = IDR 4,214.00Dharmesta, n.d
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3. Break-even Point pricing method

https://cpssoft.com/blog/manajemen/apa-itu-bep-break-even-point/
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Variable cost pricing is based on the idea

that total costs do not always have to be
covered to carry out profitable business
4. Variable activities.
cost pricing
method
This variable cost pricing system can be used
to determine the minimum price that can be
offered.

Dharmesta, n.d
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Increase sales;

Maintain and improve market share;

Goal
setting Price stabilization;

Price:
Achieving return on investment targets;

Achieve maximum profit.

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Pricing objectives
that marketers can choose
from:
u1) Profit maximization

One of the pricing objectives that can be used is

short-term profit maximization.

This goal is usually considered unrealistic, and can

be achieved if the product has a short life cycle.
Since the company decides to maximize profits,
fixed cost and variable cost data must be collected
to assist in determining the optimum price.
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2) Revenue maximization

Another objective as an alternative in setting prices for

producers of product Y is to try to maximize revenue. This
income level is often influenced by factors such as: ua)
Separation of management from the owners; ub)
Payroll system uc) Various kinds of risks that
may be faced.

Revenue maximization is widely adopted by companies

and it seems that the consequences of pricing objectives
are easy to understand.
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3) Maximization of unit volume

The third pricing objective for a company that

produces product Y is to maximize the volume
in its units with a maximum profit limit.

Setting prices based on the maximum possible

volume of units sold will give the company the
possibility of making smaller profits.
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