How do you know when the pricing is right?

A report submitted to
Prof. Prantosh Banerjee

In partial fulfilment of the requirements of the course

Pricing

Submitted By – Group 2

Apurva Tomar 2011032

Iftekar Ahmed 2011089
Krithika GR 2011113
Prithviraj Patil 2011165
Shreya Saloni 2011238
Animesh Bordoloi 2011292

On

15-11-2021
According to managers, pricing is the most significant pressure to perform and retain a good
business. This pressure is intensified because they believe that they don't control the price and
that the market dictates it. Pricing is often seen as a problematic area that requires setting
objectives and measuring results. Even though defining objectives and citing concrete goals
are still easier to accomplish. However, price down a product becomes difficult. Therefore,
judging pricing quality from outcomes from financial statements is a risky business. And yet,
setting the right price sets a tremendous impact. Accurate pricing leads to better improvement
and can yield significant results. To improve our company's pricing capability, managers
should focus on the process and not directly on the outcome. Therefore, the first question to
not ask is what should be the price, and should be, if we have addressed all considerations
that will determine the correct price.

Since pricing is not simply a matter of getting one key thing right, proper pricing should
come carefully and consistently, supported by thoughtful managerial decisions even though
not every point applies to every business. Managers. Supplement the checklist with actions
about their specific situation to get the pricing function correct.

Strategy and coordination:

1. Marketing strategy: Company's pricing policy gives its customers an essential sense
of its philosophy. Therefore, a company should let its consumers know that it is their
friend and easy to do business. This thereby leads to friendly and trustworthy
relationships, which can be established with customers. Price is also a mirror for other
attributes that a company tries to communicate. Therefore, consistency and synergy of
price and rest of the marketing mix are critical requirements for business success.
2. Coordination: We can observe multiple participants, such as accounting providing
cost estimates. Marketing communicates the pricing strategy and sales provide
specific consumer inputs. Production set supply boundaries and finance established is
the requirement for the entire company's monetary health. While considering the
coordination of a pricing process, managers should ask questions such as what is our
pricing objective? Do all participants in the process understand the objective and
whether they have an incentive to pursue the objective? Hence, proper pricing
requires input from several people. But no mechanism prevails to cater to a unified
system of pricing performance that is guaranteed success.
Steps to better pricing:
1. Assess what value the customer places on a product or a service: This can be
accomplished by determining the cost, applying the design markup, and then
deciding on the price.
2. Look for variation in the way customers value the product: Customising price
is the key to a company's financial health. Therefore, superficial differences in
taste affect value variation to a great extent.
3. Assess customers price sensitivity.: This can be accomplished by considering
customers economics. This means that price sensitivity increases. And a
company's pricing latitude decreases concerning the end-user. And the cost
opposed to a 3rd party. Additionally, the cost of an item also represents a
substantial percentage of our customer's total expenditure. Therefore, any price
pressure from further down a distribution channel. It should be looked into.
4. Identify an optimal pricing structure: It is crucial to determine whether a
company should price the individual components. Or bundle them. The two
critical issues to consider when creating a pricing structure. Are you whether to
offer quantity discounts or to offer bundled pricing?
5. Consider competitors reactions: managers should look into their competitors'
responses concerning their companies' managerial decisions. Most often, a pricing
decision taken by a company provokes a response from its major competitors.
6. Monitor prices realised at transaction levels.: price setters must analyse the
impact of the pricing program, measuring and assessing the bottom-line effect of
prices. The interaction of the various pricing terms and conditions must be
managed comprehensively.
7. Assess customers emotional response.: managers should analyse how customers
respond to a product price. And the long-term effects. On their emotional reaction.
Every transaction influences a customer's thought process about the company and
its further publicity. The key here is to understand a customer's perception, which
simple market research procedures can accomplish.
8. Analyse whether the returns are worth the cost to serve: Judging a company’s
pricing activity against the qualities and actions is essential. Adding elements for
appropriate situations and rating them according to their relevance leads to
effective pricing.