How To Choose The Correct Pricing Strategy For Earning Good Profit
Have you ever wondered whether the price fixed for your products reflect the actual value offered? Is it sufficient to meet your margins and help the business to take advantage of the existing market situation? There are various pricing strategies which must be selected according to the market condition and strength of your business. Read on to know more:
Cost plus Pricing: This is a simple form of pricing. The first step is to take into consideration all the costs incurred like raw materials, wages, power consumption, rent etc. After getting the total cost per unit, just add whatever percentage of profit you want to earn say 10% or 15% or 25%. This will be the price per unit. This method of pricing is as easy as using the Qprofit app to earn huge profits.
Assured return percentage: Sometimes when the risk appetite is high or when the production process involves costly technology it is better to prefer an assured return from sales. An assured return is needed to reward the level of risk and efforts taken. Also, an assured return would attract investors if your business needs third-party investment. Under these circumstances, you can use assured return percentage pricing.
Competitive pricing: When there is tough competition is market, keep the price slightly lower than your competitors to attract buyers.
Price skimming: When your product is vital and unique, you can initially set a high price. Once competitors slowly enter and offer similar products the price can be reduced.
Penetration pricing: When you need to penetrate the market, this strategy can be used. Normally market entrants use this strategy. The price of this strategy is kept low and one cannot expect profits. Once sales increase considerably, the prices can be raised to a normal level.
Price bundling: When you offer a wide range of related products, offer them as a bundle. The advantage of price bundling is you can indirectly gain customers for all the products offered by you. No separate marketing is needed for individual products bundled hence cost will be low and prices can be quoted at an attractive rate. The buyer also gets the advantage of lower price and bundled benefits.
Psychology pricing: This is something like keeping price $199 instead of $200. Psychologically the buyer will feel the pricing as a comparatively cheaper one and hence prefer to buy.