About This Chapter
Pricing Objectives & Methods - Chapter Summary and Learning Objectives
Correct pricing can help companies succeed. Learning the strategies for pricing can help managers set the right price. This chapter will guide you through these strategies and explain concepts like marketing mix. Instructors lead video and text lessons focused on pricing objectives and methods. Quizzes are located in each lesson to help you test your knowledge. The information in this chapter includes:
- The types of pricing strategies
- How to use different pricing methods, including time-and-material pricing and variable cost pricing
- Methods for internal pricing, like negotiated transfer pricing and cost-based transfer pricing
- What limitations of different methods are
|Pricing Objectives: How Firms Decide on a Pricing Strategy||Describe the three types of pricing strategies.|
|Pricing Cost: What Motivates Mark-up and Break-Even Pricing||Distinguish how managers decide what pricing strategy to use.|
|Target Costing: Definition, Formula & Example||Evaluate examples of target costing, and calculate the target cost of a product.|
|Cost Plus Pricing: Definition, Method, Formula & Examples||Outline what cost-plus pricing strategy is and how to use it.|
|Time-and-Material Pricing: Formula & Example||Appraise the time-and-material pricing method, and identify its limitations.|
|Absorption Costing: Definition, Formula & Example||Define absorption costing, and learn its formula.|
|Variable Cost Pricing: Definition, Formula & Example||Explore variable cost pricing and its formula for finding target selling prices.|
|Negotiated Transfer Pricing: Definition & Examples||Examine how the negotiated transfer price is used for determining a transfer price for internal sales.|
|Cost-Based Transfer Pricing: Definition & Example||Describe cost-based transfer pricing, and learn how to figure the transfer price.|
|Market-Based Transfer Pricing: Definition & Computation||Study how to use this system and understand why it is widely accepted.|
|What is International Transfer Pricing?||Recall the issues that arise when transferring goods between divisions in different countries and determine how that can impact price.|
1. Target Costing: Definition, Formula & Example
Target costing is the practice by which companies set a cost for a product and stick to it. In this lesson, we'll see how it is more common for companies to do this than you might think.
2. Cost Plus Pricing: Definition, Method, Formula & Examples
How do you determine the retail sales price of your product or service? There are many strategies you can apply to set a price. This lesson will introduce you to the cost-plus pricing strategy.
3. Time-and-Material Pricing: Formula & Example
A number of companies use time-and-material pricing as a method to make sure that they make a profit. However, as this lesson will demonstrate, it is not always as straightforward as it seems.
4. Absorption Costing: Definition, Formula & Example
In this lesson, we'll learn about absorption costing. We'll define it and learn how to calculate it. The lesson will conclude with an example and lesson summary about absorption costing.
5. Variable Cost Pricing: Definition, Formula & Example
There are many ways to set prices based on costs, but one of the most flexible is variable cost pricing. In this lesson, we will learn what variable cost pricing is, how to use it, and look at an example of it in action.
6. Negotiated Transfer Pricing: Definition & Examples
Transfer pricing is an important part of the internal bookkeeping of an organization. In this lesson, we'll look at negotiated transfer pricing, a method by which companies keep track of hard-to-price goods.
7. Cost-Based Transfer Pricing: Definition & Example
Companies that favor one practice area over another may be tempted by cost-based transfer pricing. However, the fact of the matter is that all subsidiaries have the potential to lose out.
8. Market-Based Transfer Pricing: Definition & Computation
Market-based transfer pricing is, generally speaking, the best form of transfer pricing available to companies. In this lesson, we'll discuss how it works and why it is the preferred choice.
9. What is International Transfer Pricing?
Many companies that have subsidiaries have to deal with different types of transfer pricing. However, what do you do when the transfers cross national boundaries? In this lesson, we look at international transfer pricing.
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Other chapters within the Accounting 301: Applied Managerial Accounting course
- Corporate Governance for Managerial Accounting
- Financial Statements & Balance Sheets
- Cost Classifications
- Manufacturing Overhead Cost Allocation
- Job Order Cost System
- Process Cost System
- Activity-Based Costing
- Cost-Volume-Profit Analysis
- Decision Making in Managerial Accounting
- Budgetary Control
- Standard Costs
- Capital Budgeting
- Statement of Cash Flows
- Financial Statement Analysis
- Software for Managerial Accounting
- Required Assignments for Accounting 301
- Studying for Accounting 301