Determining the price to charge for a product is frustrating for most businesses. However, getting your pricing strategy right is critical to your success in business because it affects many areas of your business. The pricing strategy impacts the type of customers attracted to your business, the quantity of product sold, how the product is perceived, product promotion and your profit.
There is no single way of determining the best pricing strategy for your business. The following is a list of factors that you may consider when developing your pricing strategy:§ The type of customers you are targeting.
§ The positioning of your products in the market.
§ The relationship between the price and quantity sold.
§ How you will promote your products.
§ How you will distribute your products.
§ The costs associated with your products including the fixed and variable costs.
§ Your competitors and their pricing decisions.
§ The objective of your pricing strategy.
§ The method of calculating price.
Review and test your pricing regularly. Be willing to test the market and adjust your pricing strategy to maximise your cash flow.
One of my clients bought a pallet of soft drink at a large discount
and passed the discount onto to his clients. The stock barely
moved. He lifted his price by 10 cents and the soft drink flew out
the door. By testing his market and adjusting the price he was able
to maximise his revenue.
