Introduction Pricing Strategy
Analysis of pricing strategies for a variety of factors and goods means the cost to cover overhead and gross margin pricing. Business licenses, real estate fees, electricity, administrative costs, such as mailing and advertising costs have many. The price of your product, but it should not appeal to consumers to ensure survival. For profit, but it also, as well as the cost of the product is based.
Before you start a business or product is ready to start pricing strategy. How real and how much profit considering the cost of entry for future growth. The competition, location, customer base and how many people are getting what is expected to sell. High ...view middle of the document...
For example, the vendor for their software to provide free installation and free updates. Men have the technical knowledge to him, because to save our customers time and effort - A "value" as "free installation" is considered. Group B free of charge to customers for installation, but "good to have" drawcard, or "value" to save money in the long run to him for free updates. Customers the same benefits that are not assigned a value.
Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation.
Cost-plus pricing - a set of items for both the cost and the current volume, fixed costs, plus a certain profit to the price including the cost of production. For example, the fixed cost of $ 30 per widget came to the party, $ 20 materials and production costs, and sales in the current (or anticipated initial sales) costs. The total cost is $ 50 per unit. You so that you cost $ 10 (20% x $ 50) Add to come up with and $ 60 per unit, up to 20% mark will determine whether the operation. Then you properly calculate the cost of accurately forecasting sales of as long, you will always be operating in profit.
Target return pricing - set the target return-to-investment (ROI) and the price achieved. For example, let's go, using the above situation, not the company you invested ten thousand U.S. dollars is assumed. Estimated 1000 sales in the first year nine. $ 60 back, you are so giving you the price per unit, 1,000 units, or ten U.S. dollars per unit on revenue of $ 10,000 needed to make profits, I want to pick up all the investment in the first year.
Value-based pricing - the price of the product for the customer to create a value-based. If you can make it, which usually is the price of the most profitable forms. This day in the most extreme changes to achieve the results you charge for the service depending on the size of the variable cost, "pay for performance" is. The energy cost of your widget, say, a typical eitneun customers save $ 1,000 a year, let's say that. If so, looks like $ 60 deal - maybe too cheap. Products reliably produce the kind of cost easily $ 200, $ 300 or more may be prosecuted, and they put money back in a month, customers will be willing to pay for it. However, to be considered is one more important element.
Psychological pricing policy - and ultimately, you are my favorite things itself, considering the price of consumer awareness:
Position - if you want, you lower prices than your competitors must be in "low-cost leader" can be. If you want high-quality signal, you will probably be priced higher than your competitors will be.
Best price point - which in the more willing people to buy certain types of products to be a "budget" (a price) is. For example, the "less than one hundred U.S. dollars" is a popular price points. "With $ 20 and $ 20 sales tax to stop down below" in which people generally have a "one...