Understanding Business II

Management and Finance

2019/2020 edition

Task: to propose a problem definition based on a chapter content

Lev Pavlyshyn

Essay on Chapter: no.13

Problem: to Identify An Appropriate Price Strategy

Your pricing strategy affects customers and their perceptions of the value of your products
or services. My 2 core elements of solving this problem are production cost and market
research.

Before setting a price for your product or service, you first need to calculate how much you
spend on its production. But even when we calculate all the costs of production, this is not
enough to set the price, you should make a markup on the product.

To correctly set the markup on the product, we need to do market research. We make
comparisons with similar competitors' products and analyze the quality and the price at
which the customer pays for their product.

Identifying the appropriate price strategy is the process that requires accurate costing and
market knowledge. To be profitable, we must not low the price to the production cost, but
rather, we need to add a markup to its value, which will be profit.