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Business Studies IGCSEPDF 114
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Cost-Plus
Pricing
Competitive
Pricing
Loss Leader /
Promotional
Pricing
Adding a fixed
markup to
production costs.
Matching
competitors’ prices.
Selling certain
products below cost
to attract customers.
Boosts sales
volume; clears
stock.
Definition:
Measures how responsive demand is to a change in price.
PED= %change in quality demanded/% change in price
Simple to apply;
ensures cost
coverage.
Helps maintain
competitiveness.
May ignore market
demand
and
competition.
Limited control over
price; profits may be
reduced.
● New vs. existing product: New = skimming or penetration; existing = competitive
or promotional.
● Uniqueness: Unique products can use skimming.
● Competition level: High competition → competitive pricing.
● Brand strength: Strong brands can charge premium prices.
● Production costs: High costs may require cost-plus pricing.
● Marketing objectives: Growth goals favor penetration; stability goals favor
competitive pricing.
Low profit margins on
discounted items.
Price Elasticity of Demand (PED)
Factors Influencing Pricing Decisions