Chron disclose how pricing is a major element of a company’s marketing strategy. The prices you establish for goods and services impact your marketing goals, strategies, profitability and value proposition. Planning effectively can help weigh the long-term ramifications of building certain price points and including them in promotion. When pricing strategies it is vital to take into account the following:
- Value Proposition
- Profit Objectives
- Goals and Time Orientation
A promise of value to be delivered and acknowledged from your customers, that the value of your goods and services will be appealed. It is important to weigh the benefits you offer to your customer. Whether you are choosing high, mid or low pricing point, you must consider the benefits and advantages of pursuing each one.
Pricing influences your profitability. The greater the prices your customers pay, the higher your profit potential. Weighing both margin and volume in pricing decisions is key, gross margin is the percentage of profit you make when comparing revenue to cost of goods sold.
When pricing taking into account whether to price with a short-term or long-term orientation is an essential part in ensuring your pricing relates to your overall company goals. Your goal ideally is to have a consistent value-driven approach, in order to obtain price optimization.
If your customers do not see the value of your products, then ultimately your product is futile. Conducting market research can help gauge the value customers place on your products features and benefits.