_{Hello Everyone
This is @max-pro from, #Bangladesh}

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Wishing everyone good health. Hope you are all well and healthy. Today I am again here to participate in this wonderful SLC | S21W5 | Costos para emprendedores - Fijación de precios learning challenge organized by our teaching teacher @yolvijrm. Here I will discuss my opinion in detail by answering some questions. So let's begin.

What is the importance of the pricing process

Pricing process is the method of determining the price of a product, taking into account factors such as cost, profit, market demand and competitors' prices. Its main objective is to sustain the business, make profit and attract customers.

The importance of pricing process is mentioned below	Source

• Ensuring Profitability : By setting the right price the business can achieve profit while meeting production and operating costs. It ensures survival and growth of the business.

• Competitive Advantage : Pricing helps to position the product or service correctly compared to the competitors, which helps to survive in the market.

• Reflection of Consumer Needs : Consumers judge and evaluate product quality based on product price. Right pricing helps attract and retain customers.

Source

Alignment with market demand	Demand-based pricing helps in pricing according to consumer demand, market trends and affordability.
Building Business Reputation	A right pricing policy helps create a positive image for the brand and ensures customer loyalty in the long run.

So the pricing process is not just a financial activity it is a strategic move that determines the success or failure of the business.

What aspects should be considered when setting the price of a product or service?

There are several aspects that should be considered in determining the price of a product or service. Below I have presented a few points in detail.

Production cost	Raw material, labor and other direct costs. Fixed costs (rent, salaries) and variable costs (transportation, electricity).
Market and Competition	Prices of competitors and their strategies also demand and supply of products in the market.
Customer Valuation	How much customers value the product and how much they are willing to pay for it.

Source

Profit target :- how much profit the business wants to make and ensure return on investment.

Brand positioning :- Is the product generic, or premium? Pricing according to brand reputation.

Laws and Taxes :- Fixing prices according to tax and government regulations. By considering these aspects, an accurate and effective price can be determined for the product or service.

Provide examples of businesses that fit the pricing methods explained in class, stating your reasons.

A simple example of one of the pricing methods explained in the post above is a small business bakery.

Cost-Based Pricing Method :-

• Let's say a person makes and sells cakes in his home. It costs him 200 BDT (raw material, labor, electricity) to make each cake.

• He wants to make 20% profit on every cake sold.

• His selling price will be: 200 + (200 × 20%) = 240 BDT.

Demand-based pricing method:-

• The demand for cakes increases during Eid or Christmas.

• Customers are ready to pay up to BDT 300 for a cake.

• Then he sells the cake at a slightly higher price than the competition, eg: 280-300 BDT.

Competitive pricing method:-

• If the price of other bakeries in the market is BDT 250, he will keep his cake price between BDT 240-250 to compete.

• As a result, customers will be interested in buying its product because it is competitive.

What percentage of profit should be added to a total unit production cost of $25.00 to achieve the desired profitability?

We will use the following information to resolve the issue:

• Information provided :-

Investment	$130,000
Rate of Return	20%
Sales level	21,000 units
Unit production cost	$25.00

Step 1: Determine the desired profit

Desired Profit = Investment × Rate of Return
= $130,000 × 20%
= $26,000

calculation by @max-pro

Step 2: Calculation of profit per unit

Profit per unit = Desired profit ÷ Sales level
= $26,000 ÷ 21,000
= $1.24 (profit per unit)

calculation by @max-pro

Step 3: Calculation of profit percentage

Profit percentage = (Profit per unit ÷ Unit cost of production) × 100
= ($1.24 ÷ $25.00) × 100
= 4.96%

calculation by @max-pro

Final Answer:-

4.96% profit should be added to achieve the desired profit.

At what price should it be launched in the domestic market

Selling price to the domestic market is calculated, which is calculated by adding the profit per unit to the cost of production.

• Information provided:

Unit production cost	$25.00
Profit per unit	$1.24 (as per previous calculation)

Determination of selling price:

Selling price = unit production cost + profit per unit
= $25.00 + $1.24
= $26.24

calculation by @max-pro

Answer	The domestic market will go for a price of $26.24.

If the competition has a price of $28.00 for a product with similar characteristics, would it be possible to compete?

The probability of competing should be analyzed by comparing the competition price and the Steemian company's calculated price.

The calculated value of Steemian Company is	$26.24
competition Price	$28.00

• Analysis :-

The Steemian company's calculated selling price is lower than the competition's price ($28.00 - $26.24 = $1.76 less).

So the price calculated by Steemian Company is $1.76 less than the competitor price. Providing products at these low prices will provide a competitive advantage in the market.

As the Steemian company's calculated price products are of similar features, customers will be interested in buying the product at a lower price.

Final Answer :-

Yes, it would be possible to compete in the market by selling at a price of $26.24 compared to the competition. It is also profitable and attractive to customers at the same time.

The pricing process is an important strategic step for a business. This is crucial not only for profit and cost recovery but also for staying competitive and attracting customers. The examples and analysis shown in this post show how even a small business can achieve its goals by applying the right pricing strategy. So a proper and well-planned pricing process is key to the success of any business. So I am very happy to participate in this contest.

So I am Inviting my lovely Steemian friends @sushanta83, @kouba01, @selina1 to Participate in this Competition.