Food Preservation and Storage

Food Preservation Storage

Lesson 15: Packaging, labeling and costing of food products

Pricing Methods

Methods commonly used for fixing price of a product are:

• Market rate method
  This is adopted when all producers are charging more or less the same price. The price is guided by the prevailing market rate. The advantage of this method especially for new microenterprises, is that they get some immunity from the vagaries of price fluctuation.
• Cost plus pricing
  This is done considering the total cost of the product and the extent of profit the producer wants to earn. Total cost is the sum of variable cost and fixed costs attributable to one unit of output. A margin of profit is then added to determine the price.
• Discount Pricing
  Most producers adjust their price lists and give discounts and allowances for early payment, volume, purchase and off season buying. Some of the methods used for pricing discount are:
  • Cash discount: A cash discount is a price reduction to buyers who pay their bills promptly.
  • Quantity Discounts: A quantity discount is a price reduction to those buyers who buy large volumes.
  • Seasonal discounts: A seasonal discount is a price reduction to buyers who buy products during the off seasons.