Product and Pricing Strategies
Pricing strategy is a method which companies use to price their products or services. This helps you to discover the optimum price for your product. Following are the pricing strategies:
- Penetration pricing,
- Economic pricing,
- Price skimming,
- Discount pricing,
- Product life cycle pricing and
- Competitive pricing
- Product Bundle Pricing
- Psychological Pricing
Following are the factors considered while Pricing your product
- including pinpointing your target customer,
- tracking how much competitors are charging, and
- understanding the relationship between quality and price.
Pricing Strategy Concepts & Steps
- Before developing pricing strategy in the marketing plan,
- define your positioning,
- create your brand strategy, and
- identify your distribution channels.
- Match your pricing strategy to your value proposition
Price of the product is an important factor (Your price sends a strong message to your market) – it needs to be consistent with the value you’re delivering.
- The process followed by the company should be right and no errors should be done while calculating (Understand your cost structure and profitability goals) (Companies calculate these costs differently, so verify the exact calculations your company uses for)
- Cost of goods sold (COGS),
- Gross profit
- Compare your competitors’ prices with yours
Compare your prices with your competitors to gauge where your price falls. If your value proposition is operational effectiveness, evaluate your competitors on a regular basis to ensure that you’re continually competitive.
- Determine price sensitivity
Higher the price lower is the volume. Total revenue and/or profit can be generated by selling fewer units at a higher price; it depends on how sensitive your customers are to price fluctuations.