Examples of Captive Product Pricing Razors and razor blades. Printers and ink cartridges. Smartphones and wireless plans.
What is the difference between optional pricing and captive pricing?
We speak of captive product pricing when companies make product that must be used along with the main product. On the contrary, in optional product pricing, we should think of products that can be bought/sold with the main product. Examples for captive product pricing are razor blade cartridges and printer cartridges.
How can companies benefit from captive product pricing?
Captive product pricing increases sales of several products by offering core and accessory items that require each other for full use. However, to use the core item, the product must be accompanied by high-profit accessories, which often require repetitive purchases.
What is Capital product pricing?
One of the strategies that they use is captive product pricing. This specific pricing strategy involves a retailer selling a base product for an inexpensive price or even giving it away for free. However, additional products are required to receive full benefit of the item received.
What is an example of a captive brand?
Rather than marketing store brands as some lesser, cheaper alternative to brand name products, Wal-Mart, Walgreens, CVS and others are increasingly creating and promoting their own “captive brands.”
What is a captive brand?
A captive brand is a brand that is owned and sold exclusively by a retailer without evidence of this relationship.
What are the 5 product mix pricing strategies?
Five product mix pricing situations
- Product line pricing – the products in the product line.
- Optional product pricing – optional or accessory products.
- Captive product pricing – complementary products.
- By-product pricing – by-products.
- Product bundle pricing – several products.
What are captive brands?
What do you mean by captive company?
A captive finance company is a wholly-owned subsidiary that finances retail purchases from the parent firm. They range from mid-sized entities to giant firms depending on the size of the parent company. This can offer the parent company a significant source of profit and limit the amount of risk exposure.
What are the advantages of captive product pricing?
Captive product pricing increases sales of several products by offering core and accessory items that require each other for full use. Within the captive pricing strategy, core products usually require a one-time purchase of relatively low value.
How is cost accounting standard on cost of production for captive?
According to the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000, the assessable value of goods used for captive consumption is 115% (110% w.e.f. 05-08-2003) of cost of production of such goods, and as may be prescribed by the Government from time to time. 2.
How are captive operations supposed to lower cost?
In the first place captives are supposed to lower cost through labor arbitrage. But recent research shows that buyers are seeking not only cheaper but skilled labor at offshore/nearshore locations. They want to obtain competitive advantage and gains from process improvements.
How does a captive work for an insurance company?
This provides an opportunity for the insurer to shift costs to the insured through the device of a captive. These costs can also be shifted through deductibles, retentions, and coinsurance, but a captive can create the illusion of control for the insured, while eliminating nuisance costs for the insurer.
