The five pricing categories (23)

In my last job at a large company, I was assigned to control its prices and profit sales margins, which expanded my view of pricing.

That time, I was able to observe that the prices of goods and services can be arranged, according to the operation nature and the type of customer, into five categories: for the private sector in the internal market, for government entities, for export, for domestic transfers, and for transfers to the foreign market, as shown in the figure and detailed below.

1) Prices for the private sector in the internal market
Prices for the private sector in the internal market are those fixed for individual consumers and private legal entities, including for the e-commerce business-to-customer (B2C) and business-to-business (B2B), inside the country.

2) Prices for government entities
Prices for government entities are those used for acquisitions from public companies and government administration bodies.
According to the Federal Acquisition Regulation of the United States of America, the governmental acquisition modalities are sealed bidding, contracting by negotiation, simplified acquisition, consolidated purchasing programs, and micro-purchases.

3) Prices for export
Export prices are those used for sales abroad and, therefore, subject to international competition and with a minimum incidence of tribute since a market imperative in international transactions is that taxes are not exportable.

4) Prices for domestic transfers
Domestic transfer prices are the prices to transfer products and services between production or commercial subunits (factories, divisions, departments, stores, etc.) of the same company or among companies of the same economic group operating in the domestic market.

5) Prices for international transfers
Prices for international transfers are those for products and services to companies outside the country that are members of the same economic group or linked to it. These firms are also named related entities, associated enterprises, or associated parties.

Each price category is subject to a different pricing criterion, as discussed in the next post, imposed by some legal provision, required by a control body, or negotiated by the parties involved.

C. L. Eckhard, author of Pricing in Agribusiness: setting and managing prices for better sales margins.