Price

• Price often influences purchasing decisions, so getting it right is important
• Setting the price too high may deter consumers from purchasing, while setting it too low risks the business making losses
• Factors influencing prices:

  • The cost of making the product: price represents the revenue the business receives from selling each unit of its product
  • The quality of the product: consumers expect to pay more for high-quality products
  • The brand image of the product: branded products often have a higher price than non-branded ones
  • The demand and supply of a product: high demand allows for higher prices, but competition must be considered
• Businesses must choose between two pricing strategies:

  • Pricing low for high sales volume but low profit margin, often used for generic products
  • Pricing high for low sales volume but high profit margin, often used for luxury products or those with a strong unique selling point
• Businesses must choose between two pricing strategies:

  • Pricing low for high sales volume but low profit margin, often used for generic products
  • Pricing high for low sales volume but high profit margin, often used for luxury products or those with a strong unique selling point
• Markets are dynamic, constantly changing, requiring businesses to review prices regularly based on factors like technology, competition, market segments, and product life cycle
• Four factors influencing pricing strategies:

  • Changes in technology
  • Number of competitors
  • Market segments
  • Product life cycle stage
• New technology has led to pricing innovations like the 'freemium' model, where a basic product is free with paid add-ons, common in software and mobile apps
• Advances in technology allow immediate access to pricing information, making businesses more flexible in setting prices and needing to change them more often
• In competitive markets, businesses often compete on price, especially when selling similar products, like supermarkets offering lower prices to gain market share
• Businesses consider consumer segments when setting prices, charging higher in niche markets with less competition and lower in mass markets with high sales volume expectations
• Product life cycle influences pricing, with new products often priced high for low volume sales, while mature products face competition and may need to lower prices