The technologies of calculation methods, in which the price of similar products is calculated, are called parametric. These parametric pricing methods create a parametric series that adequately describes approaches to pricing for types of products that have approximately the same characteristics in terms of demand and physico-chemical properties. In addition, parametric pricing methods are used when the consumer characteristics of goods can be accurately set in quantitative terms. Only in this case, marketable products can be reflected by means of a parametric series, for example, machines with different functional purpose, described by indicators of their power. There can be several such parametric indicators, for example: power, consumed electricity, non-stop operation time and others. The cost in such cases can be calculated by relative correction of prices of all other goods in relation to the base. Moreover, if the price is set taking into account the fact that the basic parameters themselves can change, this pricing method is called parametric. In its simplest form, it can be reflected by the following relationship: C (n) = C (b) * {KP}, in which: C (n) is the unit cost of new products, C (b) is the cost of the base, {KP} is the change parameters that occurred in the new product in relation to the base.
Parametric pricing methods also include the normative-parametric method. Its essence lies in the fact that the new price with its help is calculated taking into account the cost per unit of the selected parameter. In this case, the formula will look like this: C (n) = C (b) + H (s) * {KP}, where H (s) is the established cost rate per unit of the selected parameter. In both the first and second cases, the formulas can be adjusted taking into account the possible application of any preferences in determining the price of goods.
Based on such basic principles of the parametric pricing methodology, for example, the unit price methodology is formed. As practice shows, it is used in the pricing of goods for any one basic quality parameter. The main indicator here is the so-called unit price, which is characterized by the quotient of dividing the cost of the main parameter by the leading main quality parameter. To avoid errors and improve the accuracy of the results, this method is used only to obtain preliminary or indicative estimates, since it takes into account only one parameter when pricing. To compensate for this drawback, parametric pricing methods include scoring and regression techniques.
It is important to consider that pricing policy is determined not only by the applied pricing methods. It is formed under the influence of a wide range of factors, including external ones. One of the most influential factors is the type of market in which the firm or enterprise is present or in which it intends to be present. Today, four main types are distinguished. As a rule, pricing in various types of markets has its own characteristics, which should be taken into account when forming a business strategy. For example, if a decision is made to act on the market of pure competition, then you should know that with many participants acting on it, practically none of them alone can have a significant impact on the market environment. But in the market of monopolistic competition, although there are many participants, goods are purchased at prices set by the leading monopoly producer.
In the same way, when the price of a product is formed, its value is influenced by pricing on factors of production. The peculiarity here is that on the market the behavior of participants is described not only by the usual action of the law of supply and demand, but also by the regularity of demand for factors of production at lower prices.