Hello friends and welcome to my article in SLC:S21/W5 in this great dynamics. I would be sharing my thoughts on the subject matter immediately.
The great benefits of proving can indeed not be overemphasized. It's wide range of profitablity amidst other great benefits towards us all. I would be highlighting the valued Importance of pricing process. The importance would be definitely explained below;
Profit Maximization: The proper price issued to a business would definitely scale up profits. The great profit would be gotten if a bench mark for price is set, this enhancing income and profit which covers the cost of running the business eventually.
Sales Volume Optimization: Adequate pricing put in place most definitely makes the sales funnel to be at optimum state. Proper price would s much so as attract customers to products this increase the attract customers to produce thus increasing the volume of products sold, thus promoting sales optimization.
Customer Attraction: The customers attracted to a price friendly brands, to this effect a perfect product with adequate price tags would eventually blend to a more customer Attraction thus obtaining success in business on the long run eventually.
Strategic Positioning & Market Value: The price attached to your brand adds market value to your products, it simultaneously strategically positions you in the market, setting eyes of customers on you, it skyrockets your market value and enhances more demand while strategically positioning you in the market.
Edge Over Competitors: A proper study into pricing and price related activities definitely gives brands an edge over others. It makes them conquer their niche thus giving the business brands an edge over its competition.
 sourcegood pricing system, an edge over competitors |
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Various factors should be considered when establishing prices for product or services. I would be sharing these aspects of concern to be considered when establishing prices of product or service.
The customers indeed are a function of scalability of any business, thus these customers review would make or mar your business. In view of this products which are appealing to customer earn great reviews to get customers attention you need to put prices at affordable rates for them to indeed benefit, it remains a major aspect of consideration.
You must try every possible way to attract customers to your business through one of many approaches which would be putting efforts to give discounts of Sumptuous and irresistible offers in pricing, to enhance more customers visiting your business, this aspect is priority in scaling up your business.
 sourceproduct discount is as function of pricing |
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The market is dynamic and thus flexible, prices of products rise and fall, therefore you mustv study the market structure, knowing when to adjust your pricing system, this is a crucial part . If product prices are too outrageous it affect your business and remains a major aspect to be considered.
Cost Based Pricing:
Example; Manufacturing Companies like Aluminum Companies.
Reason; These companies calculate total cost of production, which includes materials, labor, overhead cost and miscellaneous budgets attached thus determining perfect selling prices ensuring major cost covered and company running in profit
Value-Based Pricing
Example Mercedes Benz Company
Reason; Customers are eager to buy a Mercedes Benz to follow the trend no matter the cost value. It's the name behind the brand that instigates value, this a Benz company would indeed be a value oriented brand
Competitive Pricing
Example; McDonald's Company
Reason; McDonald's uses competitive pricing to offer products at less expensive price, an edge over competitors. These low-cost strategy interests customers this yielding more profits
Premium Pricing
Example: Rolls Royce Company
Reason: This company provides highly premium cars, a countable lot to their thirsty customers established to emphasize it's luxury. Customers appreciate and esteem these products highly for its quality and luxury.
Determinating percentage profit required we calculate total profit needed and distribute across sales Volume.
| Initial Investment | $130000 |
|---|---|
| Expected Return | 20% of $130000 |
| Total Profit Needed | $26000 |
| Unit Production | 25 |
| Sales Volume | 21000 units |
We can see that profit per unit: $1.24, Selling Price: $26.24 percentage Profit : 4.96% is required. Market Entry:= Selling Price Per Unit = $26.24
$28 is competition price thus higher than selling price of $26.24
Steemians entry at $26.24 offering competitive advantage of 1.76 while achieving return of same price.
Conclusively, 4.96% percentage profit is required, $26.24 per unit is market entry. $28 possible to compete as calculated price is lower than competitive price
Greetings @daprado1999
1.- You have presented the importance of pricing, making it clear that it is a decision that determines the profits of the business.
2.- You have mentioned the aspects that must be taken into account when setting prices, highlighting the market strategy.
3.- It has shown in an acceptable manner an example of companies that adjust to pricing methods.
4.- You have solved the proposed exercise in an acceptable manner, and showing a brief analysis of competitiveness.
Thanks for joining the contest
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Warm regards and indeed thanks so much for your review on my article.
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