LAHORE GARRISON UNIVERSITY

Professional practices

Assignment No. 04

SUBMITTED TO: Sir. Osama

SUBMITTED BY:

Ahsan Ilahi {Fa-2022/BSCS/210/E}

3rd. SEMESTER
How pricing is important for a business?
Pricing is a critical factor for the success of a business, as it directly impacts various aspects of the
operation, profitability, and customer perception. There are some reasons why pricing is important.

Revenue generation
Pricing directly affects the company's revenue. For sustainable profit, it is essential to balance setting
prices high enough to cover costs and low enough to attract customers.

Profitability
Proper pricing strategies contribute to a business's profitability. A well-thought-out pricing strategy
ensures that the revenue generated from sales exceeds the cost of producing and selling the products or
services.

Positioning In the Market

Pricing can be an important factor in determining how a business is positioned in the market. It depends
on the pricing strategy, a company can position itself as a high-end, premium brand or as a cost-effective,
value-oriented option.

Brand Image
Pricing contributes to the overall image and apparent value of a brand. Customers associate higher prices
with higher quality. Therefore, setting prices according to the perceived value of a product or service is
essential for maintaining a positive brand image.

Customer Perception:
The way customers perceive prices can influence their purchasing decisions. Discounts, promotions, and
transparent pricing can create positive perceptions, while confusing or deceptive pricing practices can
lead to distrust and negatively impact the brand.

Customer Retention
Pricing is crucial for a business as it affects revenue, profitability, brand image, market positioning, and
customer perception. Setting prices strategically and transparently can contribute to customer satisfaction
and retention, while deceptive pricing can negatively impact the brand.

Adaptation to Market Trends

Businesses need to be aware of market trends and adjust their pricing strategies accordingly. For example,
embracing subscription-based models or freemium pricing structures might be beneficial in response to
industry trends.