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Pricing - the market in focus
A startup business must decide the pricing for his or her product or service, but what is the best price?Before your product or service reaches the customer, a number of cost accumulating activities have taken place. These have to be calculated and taken into account.
But also other pricing factors must be taken into consideration before choosing the optimal sales price.
- Read
about Estimating Cost
Pricing: Demand from target group
Your target group conditions also influence the pricing:
- What are the customer’s requirements, buying motive, expendable capital?
- Season, trend, fashion
- The customer’s price expectations – psychological price, corporate image, price and quality, etc.
Put yourself in the customer’s place, then fix the price. During periods of
low consumer expenditure it may matter whether your product/service is a
necessity or a luxury item.
Market Structure
Depending on the competitive situation in your market you must at least
investigate the below:
- General price level of the product/service
- Are the competitors campaigning on price?
- Which other competitive parameters apply?
Pricing when Inter-changeability
If price is the most important parameter you must also consider if other
products/services are inter-changeable with yours. If you sell take away spring
rolls and your neighbour sell hamburgers these products are inter-changeability.
The customers hunger will be satisfied from both products.
The higher inter-changeability the more the customer gains from purchasing
the cheapest product/service.
- Go to next
business issue: Pricing - Expences in focus
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Copyright © 2009 Dynamic Business Plan 06-09-2010
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