# Parametric pricing methods

Technologies calculation methods, in which the price is calculated on a similar product, called parametric.These parametric methods of pricing create parametric series, which adequately describes the approaches to the formation of prices for products with approximately the same characteristics and needs of the physico-chemical properties.In addition, parametric methods are used in pricing when the consumer products characteristics can be accurately set in quantitative terms.Only in this case, commercial products can be reflected by the number of parametric, such as various functional purpose machines described in terms of their capacity.Such parametric indicators may be several, for example: the power consumed by the electric power, uptime and others.The cost in such cases can be calculated by correcting the relative prices of all other goods in relation to the base.Here, if the price is determined taking into account the fact that they can themselves change the basic parameters of such a method is called parametric pricing.In its simplest form, it can be reflected by the following relationship: C (n) = C (b) * {MP}, where: C (n) - the unit value of new products, C (b) - the cost base, {CP} - changeparameters that have occurred in the new product compared to the base.

In parametric methods include pricing and regulatory parametric method.Its essence lies in the fact that the new price on its aid is calculated taking into account the cost per unit of the selected parameter.In this case, the formula would look like this: C (n) = C (b) + H (z) * {KP} where H (s) - fixed rate costs per unit of the selected parameter.And in the first and second cases of the formula can be adjusted based on the possible use of any preferences in determining the price of the goods.

On the basis of the core principles of parametric pricing methodology consists, for example, a technique specific price.As practice shows, it is used in the formation of prices for goods at any one main parameter of quality.The main indicator is becoming so-called unit price, which is characterized by the quotient of the value of the main parameter leading to the main parameter of quality.To avoid errors and improve the accuracy of the results, this method is used only for preliminary or rough estimates, as it takes into account at pricing only one parameter.To compensate for this deficiency, parametric methods include methods of pricing points and regression.

important to note that pricing is determined not only applicable pricing methods.It is influenced by a wide range of factors, including the nature and appearance.As one of the most influential factors is the type of market in which there is a firm or a company which is going to be present.Today, there are four main types of them.Generally, pricing for different types of markets has its own characteristics that must be taken into account when shaping business strategies.For example, if a decision is made to operate in the market of pure competition, you should know that when a lot of action in it participants virtually none of them alone can have a significant impact on market conditions.But in the market of monopolistic competition, though there are many participants, the goods were bought at prices set by the leading exclusive manufacturer.

Similarly, the formation of the price of goods on its value affects the pricing of factors of production.The peculiarity here is that the market participants' behavior is described not just an ordinary operation of the law of demand and supply, but of demand and patterns of production factors at lower prices.