Discounts for prompt payment: Also known as cash rebates, are designed to encourage customers to make payment of your account at a certain time period or as soon as possible.
This discount rate is a reduction in the price list that applies to the payment is made within a specific period. A typical example is “2 / 10 net 30″ means that must be paid within a period of 30 days and that the buyer can subtract 2% of the invoice if paid before 10 days.
Discounts Season: Also known as seasonal discounts, aim to encourage the purchase of one or more products in the seasons of lower demand.
This discount rate is a reduction in the price list that applies to the purchase of products that are out of season. For example, discounts offered by travel agencies and airlines in the periods in which their sales to certain destinations down considerably. ¡Business are business!
Commercial Discounts: Also known as functional discounts, aim to encourage members of distribution channel (wholesalers and / or retailers) to perform certain functions.
This discount rate is a reduction in the price list that applies to members of the distribution channel when performing certain functions such as sales, warehousing, promotion, among others.
Types of Discounts:
In general, there are four types of deductions that are used most frequently:
Volume Discounts: quantity discounts are also called, are designed to encourage customers to purchase larger quantities of a product or product line.
This discount rate is a reduction in the price list that applies to purchases whose volumes are larger than normal, either in units or securities (cash).
Or there are known two types of volume discounts:
Not cumulative: They apply to a specific purchase. Its aim is to encourage the purchase of large volumes of a product or product line focused on a single order. For example: Discounts major purchases of 1,000 units or above the U.S. $ 10,000 - D.
Cumulative: In this case, discounts are applied to the total purchases made by a buyer in a period of time. Its aim is to achieve repetitive or frequent purchases and customer loyalty. Some examples of these discount programs are “frequent flyer” for the airlines or “frequent guests” in the case of hotels …
To encourage both members of distribution channel (wholesalers and / or retailers) and consumers and industrial users or businesses to do something that would usually make major purchases, as usual, pay your bill well before the due date, buying out of season or make a role-marketing managers have the option of offering one or more types of discounts. To do this, it is imperative that experts in the market should know the different types of discounts, which objectives are and what each of them, with the aim of having a basic idea about the different options that can be included as part its strategy for adjusting prices.
Pricing for freight absorption: To avoid some of the competitive disadvantages of the previous system and penetrate more deeply into other markets, the seller must be willing to absorb part of the freight to more distant buyers are drawn by the price . The limit is the price you’re willing to absorb.
Pricing standard delivery: In this case, all buyers, regardless of their location, pay the same. This mode is used when transport costs are a small part of total cost structure of the seller.
Pricing zones for delivery: In this case, the market is divided into geographical areas and within each set a uniform delivered price.
Pricing assumption delivery: It is useful for companies with strong interest in selling their products to a specific customer or geographical area. With this strategy, the company bears all costs of transportation or part of them. The company can argue that if their sales increase thanks to the partial or total transport costs, and decrease its average costs offset the extra costs they incurred. This strategy is used for market penetration and to stay in markets where competition is constantly increasing.
Pricing from a base point: In this case, the firm chooses a city as a “Base Point” and charged to all customers transport costs from that point until the final destination, regardless of the actual origin of the shipment. While this strategy was used by some sectors (sugar, cement, steel and automobiles) today is a strategy that has less popularity. However, some companies choose several basis points to provide greater flexibility, ie, added to the basic price of transport costs from the Base Point city nearest to the customer.
It is worth noting that a company can choose more than one alternative in their pricing strategy by geographic areas, so that way, the buyer may choose between various options that best suits their ability or desirability. ¡Business are business!
Pricing Strategies for Geographic Areas
According Agueda Esteban Talaya, transport is an important factor in pricing. The value of a product increases as the distance from origin increases, increasing their cost-sharing variables.
Therefore, regardless of which of the above pricing strategies are designed and implemented, it must determine a pricing strategy by geographic areas to establish agreements with the buyers about who pays (or all) of the shipping, according to their geographical location.
Among the different alternatives (to be considered in the Strategy) can be taken into account the following:
Pricing factory called “FOB (Free On Board) or LAB (Free On Board), indicates that the seller pays the cost of loading the goods on the means of transport and point of shipment when the property passes to the buyer. The buyer pays the full cost of transport and freight is the responsibility of the seller only the costs of loading the product.
Companies in favor of this method of fixing prices and transport costs, which is considered the most fair because each buyer choose their own transportation costs. ¡Business are business!
