Pricing Strategy

• PRODUCT

  • allows you to address the questions key to sales conversion: what problem or issue does the product solve for customers? Why is your product the best one to solve it?
• PRICE

  • The strategy behind the pricing of your product needs to be based on what your customers are prepared to pay, costs such as retail mark-up and manufacturing, as well as other considerations
• PLACE

  • focuses on the methods of distribution and places where consumers can obtain the goods or service this includes things like internet stores, retail locations, and logistics.
• PROMOTION

  • Refers to the methods and techniques used by companies to interact with their target market and influence people to buy their goods or services. It includes several factors, including direct marketing, public relations, sales promotion, and advertising
• PEOPLE

  • Excellent customer service not only converts to sales, but can increase your customer base by referrals. Acquiring these referrals by people who love your brand.
• PROCESS

  • The process of delivering your product to the consumer should be designed for maximum efficiency and reliability, but may also include features that are in line with your brand, such as being environmentally or sustainably focused.
• PHYSICAL EVIDENCE

  • Incorporate aspects that proves your brand exists and that a purchase took place.
• Customer value

  • best defined as how much a product or service is worth to a customer.
• WAYS HOW TO DEMONSTRATE CUSTOMER VALUE

  1. Share customer testimonials
  2. Leverage competitor comparisons
  3. Collect and apply feedback
  4. Find opportunities to surprise and delight
  5. Acknowledge and reward customer loyalty
• Psychological pricing

  • is a pricing strategy that impacts the consumer’s subconscious mind. Marketers and businesses set prices in a way that psychologically impacts consumer perceptions and behavior.
• 5 COMMON PRICING OBJECTIVES

  1. MAXIMIZE PROFIT
  2. QUALITY LEADERSHIP
  3. DISCOUNT PRICING
  4. PREMIUM PRICING
  5. BUNDLE PRICING
• MAXIMIZE PROFIT

  • The short- or long-term method by which a business can ascertain the pricing, input, and output levels that will result in the maximum possible total.
• QUALITY LEADERSHIP

  • A corporation can charge more for its goods or services than its competitors if it adopts the quality leadership objective, which attempts to provide the best quality product on the market.
• DISCOUNT PRICING

  • a promotional pricing strategy that lowers the original cost of items in order to increase sales temporarily.
• PREMIUM PRICING

  • When businesses wish to charge more for their goods than their rivals
• BUNDLE PRICING

  • corporations put multiple things together and offer them for sale at a single price as opposed to charging different prices for each item.
• Profit-Oriented Pricing

  • Setting prices to ensure a profit on each sale. Goal is to guarantee a profit on every sale
• Competitor-Oriented Pricing

  • Setting prices based primarily on competitors' prices. Goal is to use pricing to differentiate and to stand out.
• Customer-Oriented Pricing /Value-oriented pricing

  • Focus is on providing value to the customer. Customeroriented pricing looks at the full price-value equation and establishes the price that balances the value. The company seeks to charge the highest price that supports the value received by the customer
• The Van Westendorp Model

  • a method used in market research to find the best price for a product or service. It involves asking people about their willingness to buy at different price points. By analyzing their answers, businesses can figure out the price range that customers are most likely to accept. This helps them set prices that attract customers while still making a profit.
• Breakeven Pricing

  • a pricing strategy in which a company sets the selling price of a product or service at a level that covers all its costs, resulting in neither profit nor loss. It also tells you how many units of a product must be sold to cover the fixed and variable costs of production
• Essential Components of Break-Even

  1. Fixed costs
  2. Variable costs
• Risk Return Tradeoff

  • A breakeven price describes a change of value that corresponds to just covering one ' s initial investment or cost
• Break-even quantity

  • refers to the level of production or sales at which total revenue equals total costs, resulting in neither profit nor loss. In other words, it' s the point where a business has covered all its expenses and begins to make a profit.
• Break-even analysis

  • refers to the level of production or sales at which total revenue equals total costs, this analysis involves calculating fixed costs, average costs, and prices to evaluate the profitability of selling a certain quantity of products at different price points
• Competitive pricing/Pricing to meet competition

  • is when a business sets its prices to match what its competitors are charging. It's about keeping prices similar to others to stay competitive and attract customers.
• Pros:

  • Market Relevance:
  • Customer Attraction
  • . Flexible Strategy
  • Market Research
• Cons:

  • Profit Margin Pressure
  • Brand Perception
  • Volatile Markets
  • Innovation Stifling
• PRICING ABOVE COMPETITORS

  • Offering products or services priced superior to your competitors.
• PRICING BELOW COMPETITORS

  • you would do so if your product is limited in terms of features and functionality. It can also be adopted when you want to provide a competitive price for your customers in order to grab their attention, increase sales and your brand value.
• THE CUSTOMER AND THE PRICING DECISION

  • It bases prices primarily on the value to the customer rather than on the cost of the product or historical prices determined by competitors
• THREE APPROACHES TO SETTING PRICES

  1. Cost
  2. Demand
  3. Value-Based Pricing
• Cost

  • Based pricing is focused entirely on the perspective of the company, with very little concern for the customer.
• Demand

  • Based pricing is focused on the customer, but only as a predictor of sale
• Value-Based Pricing

  • Focuses entirely on the customer as the determiner of the total price/value package.
• Price elasticity

  • measures the responsiveness of the quantity demanded or supplied of a good to a change in its price.
• Elastic

  • very responsive
• Inelastic

  • not very responsive
• cost-oriented pricing strategies

  • Fundamental method used by businesses to determine product or service prices, focusing on meticulous production cost calculation to balance profitability, cost coverage, and competitiveness.
• Cost-Plus Pricing

  • a straightforward method where a company calculates the total production costs and adds a predetermined markup percentage.