CHAPTER ONE

PRICING OBJECTIVES

INTRODUCTION

Price is also the marketing variable that can be changed most quickly, perhaps in
response to a competitor price change.

Pricing is the process whereby a business sets the price at which it will sell its
products and services, and may be part of the business's marketing plan. In setting
prices, the business will take into account the price at which it could acquire the
goods, the manufacturing cost, the market place, competition, market
condition, brand, and quality of product.
Pricing is a fundamental aspect of financial modeling and is one of the four Ps of
the marketing mix, the other three aspects being product, promotion, and place.
Price is the only revenue generating element amongst the four Ps, the rest
being cost centers. However, the other Ps of marketing will contribute to
decreasing price elasticity and so enable price increases to drive greater revenue
and profits.
Pricing is the method of determining the value a producer will get in the exchange
of goods and services. Simply, pricing method is used to set the price of producer’s
offerings relevant to both the producer and the customer
Pricing can be a manual or automatic process of applying prices to purchase and
sales orders, based on factors such as: a fixed amount, quantity break, promotion or
sales campaign, specific vendor quote, price prevailing on entry, shipment or
invoice date, combination of multiple orders or lines, and many others. Automated
pricing systems require more setup and maintenance but may prevent pricing
errors. The needs of the consumer can be converted into demand only if the
consumer has the willingness and capacity to buy the product. Thus, pricing is the
most important concept in the field of marketing, it is used as a tactical decision in
response to comparing market situations.
Put simply, price is the amount of money or goods for which a thing is bought or
sold.
The price of a product may be seen as a financial expression of the value of that
product. For a consumer, price is the monetary expression of the value to be
enjoyed/benefits of purchasing a product, as compared with other available items.

The concept of value can therefore be expressed as:

Value in marketing, also known as customer-perceived value, is the difference

between a prospective customer's evaluation of the benefits and costs of
one product when compared with others. Value may also be expressed as a
straightforward relationship between perceived benefits and perceived costs: Value
= Benefits / Cost.
The basic underlying concept of value in marketing is human needs. The basic
human needs may include food, shelter, belonging, love, and self expression. Both
culture and individual personality shape human needs in what is known as wants.
When wants are backed by buying power, they become demands.
With a consumers' wants and resources (financial ability), they demand products
and services with benefits that add up to the most value and satisfaction.
The four types of value include: functional value, monetary value, social value,
and psychological value. The sources of value are not equally important to all
consumers. How important a value is, depends on the consumer and the purchase.
Values should always be defined through the "eyes" of the consumer.

Customer value is the satisfaction the customer experiences (or expects to

experience) by taking a given action relative to the cost of that action.

The given action is traditionally a purchase, but could be a sign-up, a vote or a

visit, while the cost refers to anything a customer must forfeit in order to receive

the desired benefit, such as money, data, time, knowledge.

We’ve been using the word “price” a lot. There are, however, other terms you may
come across in your studies and daily life that serve as synonyms.
Price Point

The price of an item is also called the price point, especially where it refers to
stores that set a limited number of price points.

For example, Dollar General is a general store or “five and dime” store that sets
price points only at even amounts, such as exactly one, two, three, five, or ten
dollars (among others). Other stores will have a policy of setting most of their
prices ending in 99 cents or pence. Other stores (such as dollar stores, pound
stores, euro stores, 100-yen stores, and so forth) only have a single price point ($1,
£1, 1€, ¥100), though in some cases this price may purchase more than one of
some very small items. Price is relatively less than the cost price.

Charge

When someone wants to know the price of a service, they may ask, “How much do
you charge? ” In this context, the word “charge” is a synonym for price.

Value ;- From a customer’s point of view, value is the sole justification for
price. Many times customers lack an understanding of the cost of materials
and other costs that go into the making of a product. But those customers can
understand what that product does for them in the way of providing value. It
is on this basis that customers make decisions about the purchase of a
product.

Fee:- London Bus: A “fare” is the price to ride a bus.

Service providers may present you with a fee list as opposed to a price tag if you
ask for the price of their services.

Fare:- You pay a price to fly, ride the bus and take the train. The price in
these industries is expressed as a fare.

Price is important to marketers because it represents marketers’ assessment of the

value customers see in the product or service and are willing to pay for a product
or service. The other elements of the marketing mix (product, place and
promotion ) may seem to be more glamorous than price, and thus get more
attention, but determining the price of a product or service is actually one of the
most important management decisions. Here’s why.
  While product, place and promotion affect costs, price is the only element
that affects revenues, and thus, a business’s profits. Price can lead to a firm’s
survival or demise.
 Adjusting the price has a profound impact on the marketing strategy, and
depending on the price elasticity of the product, it will often affect the
demand and sales as well. Both a price that is too high and one that is too low
can limit growth. The wrong price can also negatively influence sales and
cash flow.
 Problems occur if the marketer fails to set a price that complements the other
elements of the marketing mix and the business objectives, as pricing
contributes to how customers perceive a product or a service. A high price
indicates high quality. The term luxury comes to mind. If, however, a firm
wants to position itself as a low-cost provider, it will charge low prices. Just
as they do with high-end providers, consumers know what to expect when
they see low prices.

So, as you can see, it is important that a company sets the right price. A company’s
success can depend on it. However, with so many factors to consider along with
the lack of a crystal ball that will show the effect of a price change, It isn’t so easy
to do.

Different Perspectives on Price

The perception of price differs based on the perspective from which it is being
viewed.

The Customer’s View

A customer can either be the ultimate user of the finished product or a business that
purchases components of the finished product. It is the customer that seeks to
satisfy a need or set of needs through the purchase of a particular product or set of
products. Consequently, the customer uses several criteria to determine how much
they are willing to expend, or the price they are willing to pay, in order to satisfy
these needs. Ideally, the customer would like to pay as little as possible.

For the business to increase value, it can either increase the perceived benefits or
reduce the perceived costs. Both of these elements should be considered elements
of price.
To a certain extent, perceived benefits are the opposite of perceived costs. For
example, paying a premium price is compensated for by having this exquisite work
of art displayed in one’s home. Other possible perceived benefits directly related to
the price-value equations are:

 status
 convenience
 the deal
 brand
 quality
 choice

Many of these benefits tend to overlap. For instance, a Mercedes Benz E750 is a
very high-status brand name and possesses superb quality. This makes it worth the
USD 100,000 price tag. Further, if one can negotiate a deal reducing the price by
USD 15,000, that would be his incentive to purchase. Likewise, someone living in
an isolated mountain community is willing to pay substantially more for groceries
at a local store than drive 78 miles (25.53 kilometers) to the nearest Safeway. That
person is also willing to sacrifice choice for greater convenience.

Increasing these perceived benefits are represented by a recently coined term,

value-added. Providing value-added elements to the product has become a popular
strategic alternative.

Perceived costs include the actual dollar amount printed on the product, plus a host
of additional factors. As noted, perceived costs are the mirror-opposite of the
benefits. When finding a gas station that is selling its highest grade for USD 0.06
less per gallon, the customer must consider the 16 mile (25.75 kilometer) drive to
get there, the long line, the fact that the middle grade is not available, and heavy
traffic. Therefore, inconvenience, limited choice, and poor service are possible
perceived costs. Other common perceived costs include risk of making a mistake,
related costs, lost opportunity, and unexpected consequences.

Ultimately, it is beneficial to view price from the customer’s perspective because it

helps define value — the most important basis for creating a competitive
advantage.

Society’s View
Price, at least in dollars and cents, has been the historical view of value. Derived
from a bartering system (exchanging goods of equal value), the monetary system
of each society provides a more convient way to purchase goods and accumulate
wealth. Price has also become a variable society employs to control its economic
health. Price can be inclusive or exclusive. In many countries, such as Russia,
China, and South Africa, high prices for products such as food, health care,
housing, and automobiles, means that most of the population is excluded from
purchase. In contrast, countries such as Denmark, Germany, and Great Britain
charge little for health care and consequently make it available to all.

There are two different ways to look at the role price plays in a society; rational
man and irrational man. The former is the primary assumption underlying
economic theory, and suggests that the results of price manipulation are
predictable. The latter role for price acknowledges that man’s response to price is
sometimes unpredictable and pretesting price manipulation is a necessary task.

Customers compare their perceived value of similar products when

making a decision.

Whether you are deciding on a restaurant to visit, your next car, or which digital

marketing agency you want to use, there are choices available and many factors

play a part in forming that decision.

Customer value is all about subjective perceptions, which can only be influenced,

not controlled. This gives accountants nightmares. It’s why I love marketing!

Measuring Customer Value

There are many equations and models for measuring customer value. The simplest

is this:

Perceived Value = Perceived Benefits / Cost

In other words, for a given set of benefits, as the cost rises, the perceived value

drops.
 This is an important point. Value does not refer to price. It refers to the perceived

benefits stood to be gained in the context of price. Cost is only part of the equation.

Literally.

Two identical products with identical exposure can only compete on cost. Two

differentiated products do not have to compete on cost. Products are not just

differentiated by their features. They can also be differentiated because of their

brand. If Toyota brings out a car, you may presume it’s reliable because one of its

key brand features is reliability. If another carmaker releases a near-identical car,

they may struggle to compete because they do not share the same customer

perceptions.

The Drivers of Value

Take this list:

 Product function

 Points of differentiation

 Quality

 Service

 Marketing

 Branding

 Price

 Existing relationships or experience

 Personal bias from experience and upbringing

These are drivers that impact a customer’s perception of value. Some you can

control, some you cannot. For any individual customer they will rank differently in

importance. Some people love brands. Some people only buy cheap. Some favor

short form content. Some people treasure personal relationships.

Functional Value: This type of value is what an offer does, it's the solution an
offer provides to the customer.
Monetary Value: This is where the function of the price paid is relative to an
offerings perceived worth. This value invites a trade-off between other values and
monetary costs.
Social Value: The extent to which owning a product or engaging in a service
allows the consumer to connect with others.
Psychological Value: The extent to which a product allows consumers to express
themselves or feel better.
For a firm to deliver value to its customers, they must consider what is known as
the "total market offering." This includes the reputation of the organization, staff
representation, product benefits, and technological characteristics as compared to
competitors' market offerings and prices. Value can thus be defined as the
relationship of a firm's market offerings to those of its competitors.
Value in marketing can be defined by both qualitative and quantitative measures.
On the qualitative side, value is the perceived gain composed of individual's
emotional, mental and physical condition plus various social, economic, cultural
and environmental factors. On the quantitative side, value is the actual gain
measured in terms of financial numbers, percentages, and dollars.
For an organization to deliver value, it has to improve its value : cost ratio. When
an organization delivers high value at high price, the perceived value may be low.
When it delivers high value at low price, the perceived value may be high. The key
to deliver high perceived value is attaching value to each of the individuals or
organizations—making them believe that what you are offering is beyond
expectation—helping them to solve a problem, offering a solution, giving results,
and making them happy.
Value changes based on time, place and people in relation to changing
environmental factors. It is a creative energy exchange between people and
organizations in our marketplace.
Very often managers conduct customer value analysis to reveal the company's
strengths and weaknesses compared to other competitors. the steps of which are as
followed.

 To identify the major attributes and benefits that customers value for choosing a
product and vendor.
 Assessment of the quantitative importance of the different attributes and
benefits.
 Assessment of the company's and competitors' performance on each attribute
and benefits.
 Examining how customer in the particular segment rated company against
major competitor on each attribute.
 Monitor customer perceived value over time.

A customer’s motivation to purchase a product comes firstly from a need and a

want example;

 Need: “I need to eat.”

 want: “I would like to go out for a meal tonight.”

The second motivation comes from a perception of the value of a product in

satisfying that need/want (e.g. “I really fancy a McDonalds”).

The perception of the value of a product varies from customer to customer,

because perceptions of benefits and costs vary.

Perceived benefits are often largely dependent on personal taste (e.g. spicy versus
sweet, or green versus blue). In order to obtain the maximum possible value from
the available market, businesses try to ‘segment’ the market - that is to divide up
the market into groups of consumers whose preferences are broadly similar and to
adapt their products to attract these customers.
In general, a product’s perceived value may be increased in one of two ways -
either by:

1) increasing the benefits that the product will deliver; or

2) reducing the cost.

For consumers, the PRICE of a product is the most obvious indicator of cost -
hence the need to get product pricing right.

PRICING OBJECTIVES

Price is the amount of money that is charged for “something” of value. Fees,
tuition, rent, and interest are all examples of price.

The objectives of pricing should consider:

 the financial goals of the company (i.e. profitability)

 the fit with marketplace realities (will customers buy at that price?)
 the extent to which the price supports a product's market positioning and be
consistent with the other variables in the marketing mix
 the consistency of prices across categories and products (consistency indicates
reliability and supports customer confidence and customer satisfaction)
 To meet or prevent competition
Price is influenced by the type of distribution channel used, the type of promotions
used, and the quality of the product. Where manufacturing is expensive,
distribution is exclusive, and the product is supported by
extensive advertising and promotional campaigns, then prices are likely to be
higher. Price can act as a substitute for product quality, effective promotions, or an
energetic selling effort by distributors in certain markets.
From the marketer's point of view, an efficient price is a price that is very close to
the maximum that customers are prepared to pay. In economic terms, it is a price
that shifts most of the consumer economic surplus to the producer. A good pricing
strategy would be the one which could balance between the price floor (the price
below which the organization ends up in losses) and the price ceiling (the price by
which the organization experiences a no-demand situation).
Almost every business transaction today involves the exchange of money for
something. Price is one of the main variables in the marketing mix. Companies are
particularly concerned with price because it directly affects their sales and
earnings. Price can include delivery of a product, insurance, warranties, and tax. It
can be related to a physical product - such as a house - or to a service, such as an
estate agent’s commission. The list price is the price that final consumers are
charged for the product. The list price might include any or all of the following:

 physical good or service.

 assurance of quality.
 repair facilities.
 packaging.
 credit.
 warranty.
 delivery.

Customers may pay a lower price if certain elements of the list price – such as
warranties - are not provided. The list price does not include discounts, allowances,
rebates, or coupons. However, it does include any applicable taxes. From the
perspective of channel members, the list price should include a branded,
guaranteed product with warranties and service. In addition, the price should
include place availability, a fair profit margin, and promotion to attract customers.
Taxes and tariffs are included, but discounts and allowances are not.

Pricing objectives should fit in with a company’s overall marketing strategy.

Therefore, if a company is profit-oriented, its pricing objective should be to
maximise profits.

Types of pricing objectives include:

  profit- oriented.
 sales- oriented.
 status quo- oriented.

Profit-oriented objectives use a target return objective to set a specific level of

profit. A target return objective might be statedas a percentage of sales or return on
investment. Target returnobjectives tend to work well in big companies
becauseperformance can be compared against the target. Products or divisions that
fail to yield the target return might be eliminated orsold. Some companies only
want “satisfactory” profits that ensurea company’s survival and meet stockholder
expectations. Somesmall family-run businesses want a return that will provide a
comfortable lifestyle. Many nonprofits organizations set a price that just recovers
costs.Some industry leaders pursue satisfactory long-run targets because their
trading activities are in public view. Too large a return might invite government
action. Firms that provide public services face government review of their prices.
A profit maximization objective seeks to make as much profit as possible.

Pricing to achieve maximum profit does not always lead to high prices. Low prices
can expand the size of the market and provide greater sales and profits. Moreover,
a high profit industry will attract competitors – which lead to lower prices?

Sales-oriented objectives aim to get some level of unit sales, dollar sales, or market
share - without referring to profit.Nonprofits companies are likely to use a sales-
oriented objective. Many companies try to get a specified share of a market. It is
usually easier to measure market share than to determine if a firm’s profits are
being maximized. In addition, if a company has a large share, it may have better
economies of scale. Sales growth does not necessarily lead to increased profits. If
costs grow faster than sales, a large market share may lead to decreased profits.
Status quo objectives aim to maintain stable prices and to meet or avoid
competition. This objective is used when companies are satisfied with current
market share or profits and do not want to rock the boat. Status quo pricing
objectives may still be part of an aggressive marketing strategy. For example,
McDonald’s and Burger King stabilized their prices while experiencing growth
and using a very aggressive marketing strategy. Administered prices help
companies to reach their objectives.

Companies administer prices rather than let market forces set them. A firm that
does not sell directly to final customers usually tries to administer both the price it
receives from middlemen and the price final customers pay. It can be difficult to
administer prices throughout the channel because middlemen often have their own
pricing objectives to meet.

A pricing policy would not reach its objective if marketers do not administer prices
efficiently. For example, a company that offers a 30% discount in the hope of
stimulating sales should make sure that the discount reaches the final consumer
and is not just absorbed by the wholesaler. Marketing managers have to administer
prices carefully because customers must be willing to pay the price for the
marketing mix to succeed.
Setting the right price is an important part of effective marketing. It is the only part
of the marketing mix that generates revenue(product, promotion and place are all

about marketing costs).

Cost Recovery
Cost recovery, defined as the method to recovering an expenditure which
a business takes on, is both a specific and general term. Generally, cost recovery is
simply recovering the costs of any given expense. This can be the
initial startup costs of the business by meeting and exceeding the break even point,
the cost of an investment through evaluating the return on investment, or even the
cost of capital taken to finance the firm. Specifically, the cost recovery method
of accounting gains back the cost of an investment by relying on the
certified depreciation schedule of the item.

Link Between Price And Business Objectives

The pricing objectives of businesses are generally related to satisfying one of five
common strategic objectives:
Objective 1: To Maximise Profits :Although the ‘maximisation of profits’ can
have negative connotations for ‘the public’, in economic theory, one function of
‘profit’ is to attract new entrants to the market and the additional suppliers keep
prices at a reasonable level. By seeking to differentiate their product from those of
other suppliers, new entrants also expand the choice to consumers, and may vary
prices as niche markets develop.

Objective 2: To Meet a Specific Target Return on Investment (or on net

sales)Assuming a standard volume operation (i.e. production and sales) target
pricing is concerned with determining the necessary mark-up(on cost) per unit
sold, to achieve the overall target profit goal. Target return pricing is effective as
an overall performance measure of the entire product line, but for individual items
within the line,certain strategic pricing considerations may require the raising or
lowering of the standard price.

Objective 3: To Achieve a Target Sales Level: Many businesses measure their

success in terms of overall revenues. This is often a proxy for market share. Pricing
strategieswith this objective in mind usually focus on setting price that maximises
the volumes sold.

Objective 4: To Maintain or Enhance Market Share:As an organisational goal,

the achievement of a desired share of the market is generally linked to increased
profitability. An offensive market share strategy involves attaining increased
market share, by lowering prices in the short term. This can lead to increased sales,
which in the longer term can lead to lower costs (through benefits of scale and
experience) and ultimately to higher prices due to increased volume/market share.

Objective 5: To Meet or Prevent Competition: Prices are set at a level that

reflects the average industry price, with small adjustments made for unique
 features of the company’s specific product(s). Firms that adopt this objective must
work ‘backwards’ from price and tailor costs to enable the desired margin to be
delivered.

6. Survival: The foremost Pricing Objective of any firm is to set the price that
is optimum and help the product or service to survive in the market. Each
firm faces the danger of getting ruled out from the market because of the
intense competition, a mature market or change in customer’s tastes and
preferences, etc.Thus, a firm must set the price covering the fixed and
variable cost incurred without adding any profit margin to it. The survival
should be the short term objective once the firm gets a hold in the market it
must strive for the additional profits.The New Firms entering into the
market adopts this type of pricing objective.
7. Maximizing the current profits: Many firms try to maximize their current
profits by estimating the Demand and Supply of goods and services in the
market. Pricing is done in line with the product’s demand in the customers
and the substitutes available to fulfill that demand. Higher the demand
higher will be the price charged. Seasonal supply and demand of goods
and services are the best examples that can be quoted here.
8. Capturing huge market share: Many firms charge low prices for their offerings
to capture greater market share. The reason for keeping the price low is to have an
increased sales resulting from the Economies of Scale. Higher sales volume lead
to lower production cost and increased profits in the long run.This strategy of
keeping the price low is also known asMarket Penetration Pricing. This pricing
method is generally used when competition is intense and customers are price
sensitive. FMCG industry is the best example to supplement this.
9. Market Skimming: Market skimming means charging a high price for the
product and services offered by the firms which are innovative, and uses modern
technology. The prices are comparatively kept high due to the high cost of
production incurred because of modern technology. Mobile phones, Electronic
Gadgets are the best examples of skimming pricing that are launched at a very
high cost and gets cheaper with the span of time.
10.Product –Quality Leadership: Many firms keep the price of their goods and
services in accordance with the Quality Perceived by the customers. Generally,
the luxury goodscreate their high quality, taste, and status image in the minds of
customers for which they are willing to pay high prices. Luxury cars such
as BMW, Mercedes, Jaguar, etc. create the high quality with high-status image
among the customers.
Pricing mistakes

Despite its role in maximizing the firm’s performance in the market, very few
organizations handle pricing well. They commit a series of mistakes. The most
common of these are:

1. Pricing decisions are often too heavily biased towards cost structures and fail
to take sufficient account of either competitors’ or customers’ probable
response patterns;
2. Setting prices independently of other mix elements without sufficiently explicit
account being taken of product, promotion and distribution strategies.
3. Failure to vary prices to different segments of the market.
4. Failure to take into account opportunities to capitalize on differentiation.
5. Using prices as a defensive rather than offensive strategy.

Additional
Many companies make common pricing mistakes
. Weak controls on discounting (price override)

 Inadequate systems for tracking competitors' selling prices and market share
(Competitive intelligence)
 Cost-plus pricing
 Price increases poorly executed
 Worldwide price inconsistencies
 Paying sales representatives on sales volume vs. addition of revenue measures
Contrary to common misconception, price is not the most important factor for
consumers, when deciding to buy a product.
Taken together, these points suggest that pricing decisions run the risk of emerging
largely as the result of historical factors or of expediency, rather than of detailed
strategic thinking.
Difference Between Guarantee and Warranty

Warranty, is often confused with the term guarantee, which implies a commitment
given by the seller concerning the product quality. The main difference between
warranty and guarantee is that while the former is written, the latter is implied.

Before buying any products in traditional or online mode, one should be known
about the difference between guarantee and warranty, so as to safegaurd the
interest and also to avoid deception.

The guarantee is defined as the promise for the after-sales performance of the
product or service. It expresses that the manufacturer has given promise regarding
the content, quality or performance of the product and in case, the obligation is not
fulfilled then the manufacturer will replace or repair the product or the money paid
as consideration will be refunded. Although, it is valid up to a fixed time only.
Guarantee adds to the rights of the consumer.

In the contract of guarantee, there are three parties, i.e. surety, the principal debtor,
creditor where the manufacturer acts as a surety, if the performance of the product
is below average.

Warranty is defined as an assurance given by the manufacturer or seller to the

buyer that the specified facts about the product are true. It is a collateral condition
to the main objective of the contract. It specifies that the particular product is up to
the standard, i.e. quality, fitness and performance. It applies to tangible objects like
machines, electronic equipment etc.

In case if the product does not satisfy the set standards, then the manufacturer will
repair it or replace its defective part, or it will be completely replaced. There are
two types of warranty i.e. express or implied.

Differences Between Guarantee and Warranty

The major differences between guarantee and warranty are described below:

1. The guarantee serves as a promise made by the manufacturer, to the buyer,

that in case the product is below the specified quality, it will be repaired,
replaced or the money deposited will be refunded. Warranty is a written
assurance that the facts specified in the product are true and genuine, but if
they are not it will be repaired or replaced.
 2. The guarantee is a sort of commitment made by the manufacturer to the
purchaser of goods, whereas Warranty is an assurance given to the buyer by
the manufacturer of the goods.
3. Guarantees can be oral or written, where oral guarantees are very hard to
prove. As opposed to warranty, which is usually written and so, it can be
easily proven.
4. The guarantee covers product, service, persons and consumer satisfaction
while warranty covers products only.
5. The guarantee is free of cost. On the other hand, the customer should have to
pay for the warranty to safeguard the interest.
6. A guarantee is comparatively less formal than a warranty.
7. The term of the guarantee varies from item to item. Conversely, the warranty
is for long term or any product or any part of the product.
8. In the case of guarantee, money back is possible, if stated specifically,
however, this is not possible in warranty.
9. A warranty is a subsidiary condition of sale, which may be expressed or
implied. On the other hand, guarantee may or may not be a condition of sale.
Comparison Chart
BASIS FOR
GUARANTEE WARRANTY
COMPARISON

Meaning The guarantee serves as a promise Warranty is a written

made by the manufacturer, to the assurance that the facts
buyer, that in case the product below specified in the product is true
quality, it will be repaired, replaced and genuine, but if they are
or the money deposited will be not it will be repaired or
refunded. replaced.

What is it? Commitment Assurance

Applicable to Product, service and persons. Product only.

 BASIS FOR
GUARANTEE WARRANTY
COMPARISON

Condition of sale May or may not be a condition of Subsidiary condition of sale,

sale which may be expressed or
implied.

Validity It can either be oral or written. It is generally written and so it

is easy to prove.

Cost Free of cost The buyer has to pay for

warranty.

Term Varies from item to item Long term

Money back (in Yes No

case of default)