BROWSE

Backpricing

What is 'Backpricing'

A pricing method used in specific futures contracts whereby the price of the commodity to be delivered is priced by the purchaser at some future date after entering into the position.

Explaining 'Backpricing'

The price at which the purchaser can set the deliverable commodity must be relative to any monthly or periodic price found in the futures market for that particular actual.


Further Reading


System for developing real time economic incentives to encourage efficient use of the resources of a regulated electric utility
patents.google.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

The Oil Market and the Financial CrisisThe Oil Market and the Financial Crisis
link.springer.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

The Economic Implications of Natural Gas Pricing Adjustment in Indonesia.The Economic Implications of Natural Gas Pricing Adjustment in Indonesia.
search.ebscohost.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

Dramatic changes in US project financeDramatic changes in US project finance
search.proquest.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

Dynamic product acquisition in closed loop supply chainsDynamic product acquisition in closed loop supply chains
www.tandfonline.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

Mobility in Economics and Intercultural EconomicsMobility in Economics and Intercultural Economics
books.google.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

If You Could Freeze-Frame the Information Flow, What Would You Do?If You Could Freeze-Frame the Information Flow, What Would You Do?
www.tandfonline.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …

Optimizing the Marketing Strategies of Qantas Airways and Thai AirwaysOptimizing the Marketing Strategies of Qantas Airways and Thai Airways
journals.tplondon.com [PDF]
… algorithms that are described in the invention; and a subsystem that feeds back pricing information to … eventual success of this new direction will depend on whether the economics of electrical … of this invention that electric energy can assume most of the economic properties of a …



Q&A About Backpricing


When deciding on how much to charge for your products, what should you consider first?

You should consider your target market first because if you sell too high or too low, you will not be able to reach your target market effectively.

What is backpricing?

Backpricing is a pricing method used in specific futures contracts whereby the price of the commodity to be delivered is priced by the purchaser at some future date after entering into the position.

How does one maximize profit with this strategy?

By maximizing contribution margin per unit and by minimizing total fixed costs.

What is contribution margin-based pricing?

Contribution margin-based pricing maximizes the profit derived from an individual product, based on the difference between its price and variable cost (its contribution margin per unit), and on one's competitive pricing reaction strategy.

What do senior executives need to know about their company's positioning when they choose a pricing strategy for it?

They need to know that they have chosen an appropriate position within their industry or market so that they can use it as leverage against competitors' prices.

How does this method differ from other methods of pricing commodities?

This method differs from other methods because it allows purchasers to set prices on commodities they have not yet bought.

If there are many competitors in your industry selling similar products at similar prices then what should you do when setting your own price level?

You should try setting lower prices than those of other companies in order to attract more customers away from them towards yourself instead; however, if there are no competitors selling similar products at similar prices then you can set higher prices than those of other companies without worrying about losing any customers because there won't be any competition anyway!

Who needs to identify their company's pricing position, segment, capability and competitive reaction strategy before choosing a pricing strategy?

Senior executives need to identify these things before choosing a pricing strategy for their company.

What must be relative to any monthly or periodic price found in the futures market for that particular actual?

The price at which purchasers can set deliverable commodity must be relative to any monthly or periodic price found in the futures market for that particular actual.

Who sets the price for commodities purchased through backpricing?

The purchaser sets the price of commodities purchased through backpricing.