What should we charge for a product is the first question that comes to a company manager's mind when an organization is setting its prices. It must draw a pricing strategy plan for setting the price of its product given the market conditions it faces and its desire to achieve its strategic objective of profit maximization or market share protection. You get the price right and rest is the game of promotion activities to build a robust top line.
There are two alternatives available to the firm to increase profits, one of the cost side and other on the revenue side. Managing costs include having strict control over the costs whether variable or fixed and eliminating costs that do not add to the quality of the product or service. On the revenue side, firms can increase profit by either increasing product variety or adjusting the final price that it will charge to its customers.
Important factors that go into pricing of a products include benchmarking of price against competitors, quality of competitors offering & competitor’s costs and analysis of target customer segment in terms of income & expectations of customers.
Keeping track of competitor’s prices is considered an important part of competitive intelligence. Competitors can cut the price of the product in a blink of an eye if they find they market share being threatened. Therefore, timely and accurate information about competitive pricing has now become a necessity especially due to the descriptive technology that ward away the market share that an organization has created over the years.
We start the pricing exercise for your product, be it B2B product or B2C product, by analyzing the factors that affect the demand of a product or services. We understand that pricing strategy can have many objectives, from market skimming to market-penetration to survival plan and various techniques which include cost-plus pricing, Demand based pricing, Value pricing, Target Market Pricing, Going rate pricing and Auction pricing.
Pricing a product requires consideration of not only the cost of manufacturing, transporting, distributing and retailing the product but also understand the demand elasticity, customer behaviour, price of close substitute and competitor’s prices.
We at ANS MarketPro help our clients with the assessment of market demand, supply, capacity, costs involved in producing, transporting, distribution and selling of the product, understand the impact of price on the potential customers and competitors and help you to fight the pricing war in this hyper-competitive and disruptive technology environment. We understand that to price product it is important to understand the objective of pricing of a firm. We ask following questions before we suggest a price for your product:
- What is the demand of the mix of products are you offering?
- Who or what is clients target market?
- What will be the cost impact if you are distributing the product wholesale or retail channel?
- What is the estimated life cycle of your product/service?
- Are there any government policy that will prohibit the price that you want to charge your customer?
We use robust product pricing modelling techniques to provide our client with the optimal price of the product that will result in the firm achieve desired financial return since we select the pricing technique keeping your business and financial goals in mind. ANS MarketPro provides insights and analysis on more than 100 emerging, developing and developed countries across seven key growth industries.