Product Pricing

Pricing

is the process of determining the value that the customers will receive for the product in such a manner that it will meet the company’s business objectives.

Strategic Pricing

is the effective and proactive use of product pricing to drive sales and profits

Tactical Decision

short term
seasonal / offer discount

Strategic Decision

long term
positioning / profitability / competition based on objectives

If the price is too HIGH

Few items get sold - Lost competition

Become irrelevant to the market

If the price is too LOW

Forgone opportunity profit

Sets incorrect price expectations for the product category
DEMAND INCREASE

Planning stage

Understand pricing before commencing development – the first and most important part of creating a pricing strategy is done at the _________

Product development

the comprehensive, interdisciplinary process of taking a product from initial concept through market launch, including enhancing existing products

Cost

in order to arrive at product cost, we should not rely on historical costing.

Competition

this must be factored into our strategy but we must be careful not to copy them blindly.

Product development

ideation, design, engineering, and marketing to meet customer needs. The core purpose is to drive innovation, improve competitiveness, and deliver market value

Price sensitivity

a product is said to be price sensitive if a small change in price makes consumers change the brand

Product Life Cycle

as product moves from growth to decline

the price of the product usually goes down because by this time competition has similar products and consumers have understood the product and the competitors’ products can now truly value the differences.

Product Pricing

The ideal price for any product or service is one that is acceptable to both buyer and seller

Extreme Boundaries

it defines the range of acceptable prices outside of which no rational buyer or seller would ever transact.

Marginal Cost

It constitute the seller’s bottom line.

Consumer Utility

It is the value a customer gains from having the product

Historical Costing

Data gathering
Must be know the happening right now

Price war

when business decreasing the (maturity stage) price also the competitor