why pricing strategy is imprortant

Re: why pricing strategy is imprortant

Building an effective pricing strategy for your products or services is key to successful sales. Do you clearly understand price elasticity of demand (or inelasticity)? Have you completed a cost and price analysis for your products or services? You need to for competitive and profitability reasons.

Re: why pricing strategy is imprortant

Price is most importance part of an product, because without price we can buy and sell any product. Pricing strategy through we can take decision for the price, if price is very high no one can buy our product so we can select better price through the strategy.

Re: why pricing strategy is imprortant

Hello,
Your pricing strategy involves evaluating the price you will charge for your product or service, and how this price fits in with your overall marketing plan. Unlike advertising, which overtly disseminates a message, pricing provides a subtler cue about your company, attracting a particular demographic or making a statement about your product's value. A pricing strategy is also a practical matter because your company cannot succeed if you do not earn enough to cover costs.

Re: why pricing strategy is imprortant

The primary function of pricing is to specify how much money you will receive in exchange for your product or service. In order for your company to succeed, you must charge enough to cover your costs and earn at least a modest profit. When calculating how much you will have to charge to cover costs, keep in mind that your business will achieve economies of scale as it grows. In addition, you may earn more by charging less -- as long as you are charging enough -- because lower prices often result in higher sales.

Re: why pricing strategy is imprortant

Why is Pricing an Important Part of the Scientific Marketing Strategy?

Contrary to common belief, marketing managers have a lot to say about defining pricing policies. It is not particularly a job for the financial director, but mostly a marketing issue.

Price is a fundamental element in determining profits, and thus conditions the evolution of a company. As crazy as it seems, many entrepreneurs work for years to release a new product and then fix it a price in a few hours during a meeting. Obviously, decisions regarding price shouldn’t be the last decisions you make, since a product’s price can be a vital factor in its reception by clients. For example, it can affect how much you will sell, how much cash flow the company will have or the decision of competitors to enter or not the market. A common mistake by new entrepreneurs is the important devaluation of their products because they are afraid of losing sales. However, a low price can affect the credibility of a product, and is not always a judicious pricing strategy. Another common mistake is to decide the price only on the costs of production. The principal criteria should instead be the perceived value from the customers.

The principal factors for the determination of a product’s price are:

* Costs. You should sell your product at a greater price than your total unit costs (= fixed + variable costs), although in some cases other products in your catalogue can cover the fixed costs.
* Competitors. You should investigate your competitors’ prices. For example, some companies adjust their prices depending on the “reference price” on the market. Note also that, usually, competitors drive the prices of products lower and lower. If your product is clearly superior to the ones in the market, a good strategy for entry is setting a similar price to what already exists. On the other hand, if you’re offering the same quality, you could try reducing the price by about 30%. If the window between costs and competitors’ prices is really narrow, it is better to offer breakthrough prices with a minimum margin at the beginning, until the market grows enough. It’s also important to anticipate the potential reactions of leading competitors before adjusting your prices.
* Perception. Your price should be consistent with the clients’ perception of your product’s value but also with the company’s image.
* Positioning. Even if your costs are low, it might be a good positioning strategy to set a high price, especially if the target market’s purchasing power is high.
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