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Companies run into multitudes of price-related problems on the market. For some, the
Internet is the number one issue. Websites like eBay and Priceline encourage their users to
name their prices for services and products. That kind of consumer awareness when it comes
to price information means that developing a pricing strategy is now relevant more than ever.
A good pricing strategy is dynamic, and it reflects changing conditions on the market while
following what the competition is doing.
.
What are the 6 steps in determining price? Lets take a
closer look!
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Although short-term, this strategy can help boost initial performance for companies who are
introducing revolutionary products or services.
If a company is looking to maximise the profit, it can set a higher price by considering costs
and the competition. On the other hand, if a company is looking to improve and maximise its
market share, it will set a lower price to generate maximum volume.
However lucrative, this strategy can be risky, as it can cause consumer-related or legal issues.
What companies must do is plan the demand curve while understanding price sensitivity. It is
possible to estimate the demand curve by analysing historical data or performing price-
related tests. That way, a company can gain a deeper insight into how much the consumers
are willing to pay for a specific product or service.
In general, the cost per unit decreases as production level increases. That is simply due to the
learning curve effect that comes with increased experience. So to ensure you profit with this
strategy, you need to allocate the costs and set the price accordingly.
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The markup method means that you’re setting a price based on your desired profit level.
Target return means that you’re setting a price based on the company’s desired ROI.
Perceived value is as simple as setting a price based on how much your consumers
believe your product or service is worth to them in reality.
There are also auction type pricing and group pricing methods, but they are less popular.
In the End
You should always be ready to adjust your pricing based on economic, market, and
geographical conditions. As long as you follow these simple principles, you won’t go wrong.
Related content:
Marketing Management Knowhow
(https://www.gopromotional.co.uk/blog/category/knowledge-base/marketing-management-
knowhow/) – learn more about marketing with our collection of educational articles.
If however, you require further information or have any specific questions, don’t hesitate to
give a member of our experienced team a call on 0800 0148 970 (tel:08000148970) or
simply email us (mailto:hello@gopromotional.co.uk) today.
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As the founder of GoPromotional, with over 25 years of expertise, Gareth has developed an enviable
reputation in the promotional merchandise industry. Many see him as the leading, trusted authority when
it comes to online marketing. His inspiring articles and content help clients when deciding on their next
order of branded promotional products. With an entrepreneurial mind, Gareth has his finger on the pulse
of our UK operations. Responsible for marketing and technical operations he continually inspires the
team with his vision and enthusiasm to continually be the very best.
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