Hello everyone, good evening to you all and welcome back to my blog. I'm so glad to participate again in this Learning Contest. It was quite an interesting class all thanks to the teacher.

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What is the importance of the pricing process?

Pricing process is a crucial part of business, it has a strong impact on Production, value creation, Customer trust and Profit making

• Profit making

A well structured pricing process will help businesses achieve maximum profit.

• Market penetration

Choosing a low price for new products will help the goods and services to penetrate the market faster.

• Customer Perception

A good pricing Strategy that is perceived as good by the customers will help to gain their trust and loyalty and this equals to more money.

• Cost recovery

It also enables businesses to recover all the expenses they made during production.

• Value creation

A pricing process that is considered good and fair by customers will help businesses get the loyalty of their customers thereby building values for themselves.

In conclusion, business cannot function without pricing process. It helps businesses maximize profits and create values for themselves.

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

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• Cost of Production

• Direct cost

This is the amount of expenses related to the production of a particular goods and services, example raw materials, packaging, Labor e.t.c.

• Indirect cost

This are overhead Cost, they're expenses that are not directly related to the production of goods and services, example rent, utility, transportation etc.

• Profit margin

This involves knowing the total Cost used for production and distribution. This will help to ensure profit margin, to ensure that maximum profit is made in the Business.

These factor helps businesses to research and determine a Competitive price point.

• Market demand

Businesses also needs to consider the goods and products in trend and demands

Customer perception

• Value proposition

Businesses needs to understand and know how much value the Customer get from their goods and services.

• Perceived Quality

Goods and services with higher quality will also determine higher price.

• Willingness to pay

Research and know if Customers like you products, and how much their willing to pay and buy goods and services.

Pricing Strategy

• Penetration pricing

This involves setting goods and services at a lower price in order to attract customers.

• Dynamic pricing

This involves changing price based on market trend and demands.

• Bundle pricing

This involves offering giving Customers discount when they purchase multiple goods and services.

• Value based pricing

This involves setting prices based on how much value Customers place on a goods and services.

External Conditions

• Economic Conditions

Consider the Economy State of your Country, for example consider factors like Inflation, deflation etc.

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• Government rules

This involves taking into account Governments regulations like tax payment, amount of money needed to clear goods etc.

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

• Cost based pricing method

It has to do with setting price based on the cost of Production and goods and services. It also entails Direct cost such as raw materials, cost of Labor and Indirect cost such as rent, utilities.
It involves Small business like Making popcorn because the maker will only take account of only the total Cost of production, Cost of Labor and delivery.

• Demand based pricing process

It has to do with setting price based on the level of demand of a product. It takes account of Elasticity of demand which shows how Customers react to the price of goods and services. This means that the more the demand, the higher the cost. Example of business in this Category is a Transportation Company, they usually increase the price of Transportation when they discovered that lots of people are traveling and requires their service.

• Value based pricing

This method involves setting prices based on how Customer placed value on a particular product. Example of business in this category is Apple, most of their gadgets like watches, laptop, phones are very expensive because people love and value their products.

The company Steemians invests $130,000 in the equipment needed for its production to enable the production and subsequent sale of the new product. A return of 20% on the value of the investment is expected. The expected sales level for next year is 21,000 units.

Concepts	Values
Total Investment	$130000
Expected Profit	20%
Total unit cost	$25.00
Sales Volume	21000 units

From my Solving, we can deduct the following.

• Desired profit per unit= $1.24
• Selling Profit Per Unit= $26.24
• Percentage of profit= 4.96%

At what price should we enter the domestic market?

$26.24 is the ideal time to enter the market, selling Price per Unit being $26.24, then I will say we should enter the domestic market with $26.24 because it will yield maximum profit.

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

The best selling price is $26.24, because the sales price which is $26.24 is lower
than the competitor price of $28.00 So maximum profit will be made.

Thank you for this educating lecture, I invite @ solaymann, @lovelystar and @newekemini5 to participate in this contest.