COST COMPETITIVENESS &

PRICING STRATEGIES
SMALL SCALE INDUSTRIES
 INTRODUCTION TO COST
COMPETITIVENESS
• A firm that stays competitive is more likely to withstand its
position in the market for a longer period. As all of us are
aware, the ongoing globalisation and changing technologies
are making both competition and competitors keener than
ever. Hence, two main elements such as ‘quality’ and ‘cost’
that are inter- related, must be focused on for the steady
growth of an enterprise.
All forms of business, whether they are small, medium or large
scale, need to focus not only on the cost and quality of a
product but also the competitor’s price as they stand as a major
reason for any firm’s deterioration.
 SMALL SCALE ENTERPRISES
• Small scale enterprises play an important role in the country’s economic
growth.
• These small scale enterprises are generally efficiently run since they have more
number of skilled labour and have an easier access to credit facilities and with
proper targeted assistance they offer high rate of potential growth.
• Generally, a small scale enterprise is a one where investment in ‘plant and
machinery’ is more than 25lakhs and less than 5crores and where the
‘investment in equipment’ is more than 10lakh but should not exceed 2crores.
 OBJECTIVES LIMITATIONS
• more employment opportunities • Finance
• remove economic backwardness • Raw materials
• reduce regional imbalances • Idle capacity
• Improve standard of living of • Technology
people • Project planning
• ensure equitable distribution of • Managerial
income and wealth.
 INTRODUCTION TO PRICING
• Good pricing strategy helps to determine the price of a product or
service, such that maximum profit on sales can be achieved.
• A number of factors need to be considered, such as, production and
distribution costs, competitors offering, target customer base, etc.
• While customers will not buy goods priced too high, if a product is
priced too low, the business will not be able to cover its costs. Hence,
along with product, place, and promotion, pricing can have a profound
impact on the success of a business.
 PRICING FOR SMALL SCALE BUSINESS
• Having the lowest price is not much in favour of small scale business as
it leads to customers believing that the product is of low quality.
• By analyzing the following three functions in a market to determine
the demand, a business can avoid low pricing strategy:
-Competitive analysis
-Ceiling price
-Price elasticity
 PRICING STRATEGIES FOR SMALL SCALE
BUSINESS
• Cut-rate pricing:- When the entrepreneur is a customer himself, he
may decide to shop at a cheaper store, so he uses the same pricing
strategy in his company.
• Premium pricing:- Deliberately pricing your products higher than the
competition can actually increase the perceived value of your business
in the mind of the customer and has the added advantage of
supporting your bottom line.
• High touch sales services:-Nearly any small business can benefit from
the direct one-to-one relationship between the owners or senior
managers and the customers.

• Sales discounts:- discounting that is individually tailored to your best

customers and offered as "a special favor" can lock in future loyalty.