Pricing Strategies

Pricing represents the value of the product in the market. Pricing is responsible for the creation of revenue and hence the profit of the organization. It also influences the demand of the market according to the law of demand. It plays a vital role in business as it influences market demand and attracts customers to buy the product or services. Customers’ affordability can be maintained but effective pricing decisions.

Following all the various reasons why the project strategies implemented by various business organizations

To increase the profitability of the organization
To increase the demand for the product in the market
To survive in the market for a longer period of time with competency

Pricing strategies are the decisions taken in advance about what price the product should be sold in the market. These rising strategies can increase the demand and can able to generate more revenue and hence more profit.. Pricing decision is taken to achieve some of the following objectives

Profit maximization
Increase the demand in the market
Retain the existing customers
Attract new customers and expand the new market
Targeted return

Different project strategies please different roles for different organizations please stop. Organizations implement pricing strategies for different purposes. Based on their objective of purpose they adopt the type of pricing strategy and achieve the expected objective first of

Following are the various pricing policies or strategies adopted by the companies according to their purpose and the situations they face.

Competition-based pricing strategy

This pricing strategy is concerned with the decision-making of price or setting the price according to the pricing decisions taken by competitors in the market. The companies are adopting this strategy by considering the competitor’s price as the benchmark. Their objective is not to generate more profit but to capture the largest part of the market and beat the competitor.

Competition-based pricing strategy helps the company to achieve success but for a short period of time. This is because the pricing is not set according to the affordability and value of the product the customer gets. But to survive and beat the competitors it is essential in some situations.

Example

Jio Telecommunication services in India launched with very affordable or free of cost. due to the availability of telecommunication and data services at very affordable or free of cost other telecom. Companies such as Airtel, VI adopted a competition-based pricing strategy and reduced their prices to survive in the market.
Many management institutes or other educational institutes are setting the price below the market leader so that they can create a position in the market. Competition-based pricing helps any service organization to establish their business in the market by offering their services at the lifestyle that the l market leaders

Skimming pricing Strategy

In this pricing strategy, the organization sets the initial price high at the introductory stage of the product’s life cycle to generate more revenue. After a specific period of, time the price variations are made according to the competition and necessity to survive in the market.

Example

New technology launched with various electronic and electrical products sets the higher price initially to get them more revenue and profit. Customers scan pay more than they could To get advanced features or new technology for innovative technology products.

Cost-Plus Pricing

This pricing belongs to setting the price more than what cost incurred to produce the product or deliver the services. This pricing helps the organization to achieve the break-even point and hence the profit. Cost plus pricing ensures the profit margin for any business organization Irrespective of the customer’s willingness to pay and market demand or market price.

Example

Cost plus pricing of good products helps the business organization set the price at which they can generate profit.
Many branded products use cost-plus pricing to determine the appropriate price at which they can generate profit.

Value-Based Pricing:

Business organization always strives to determine the optimum optimal price at which they can achieve the highest value and best pricing. The organization tribes to make efforts to provide the product or services with customer surplus. The customer surplus can’t be responsible for attracting customers to buy the product service and contribute to the generation of the highest pay value and hence the profit of the company. Companies always provide the product with a better value to the customers. The customer satisfaction level can help the organization to achieve the highest level of revenue.

Value best pricing focuses on the various features, attributes, quality, and various factors of products or services that can satisfy the customer so we increase their value. The increased value of the product and services increases the customer surplus and hence contributes to increasing the revenue.

Example

All types of mobile phone companies are offering a number of features with mobile phones so that the customers’ expectations and the value of the product purchased product increase. Customer surplus can also be increased by offering a number of features that meet the customer’s expectations and satisfy them. Value best pricing in mobile phones helps business organizations to attract customers to buy the product and satisfy by consuming the product. Thus it is very easy to retain the customers and generate more revenue.
Car making company provides a number of features with the Bass model of car so that the customers can attracted two words by the variety of cars. The willingness of the customers to buy a different variety of cars is made possible or created by means of value-based pricing.

Dynamic Pricing

Dynamic pricing allows any business organization to set the price according to the situation or requirements. It helps to make improvements on the changes in the pricing strategy to survive in the market and to expand or grow the business in the market.

Example

All retail organizations, supermarkets, malls, and departmental stores adopt dynamic pricing to offer the products and services according to the demand season. Help this organization to generate more revenue by selling the maximum number of products.
E-commerce companies such as Amazon and Flipkart are also adopting dynamic pricing and generating the highest revenue during various seasons such as festivals, occasions, etc.

Psychological pricing

This strategy is common to various business organizations specifically retail organizations. In this rising strategy, the business organization sets the price a little below a perfect complete number. This pricing strategy considers the psychological impact of the customers and attracts the customers to buy the product by creating the illusion of affordability.

Example

In the organized retail mall the price of the products said a little less than the completed number such that $999.00