An appropriate pricing strategy can increase sales, increase profits, and separate your business from the competition.
The first thing that one needs to do to effectively price their product or services is to determine the total costs of the product or service in order to set the theoretical floor for pricing decisions. Material cost, labor cost, and overhead cost institute the total cost of producing a product or service.
Creative Pricing Techniques
1) Skimming Pricing: – Set initial prices relatively high to recover the initial capital spent, developing the product or opening the store. Feature on quality, service or uniqueness. Use this method only if you can capitalize on a current trend or fad.
2) Penetration Price: – Set initial prices low at first to quickly penetrate the market. As business develops gradually raise prices to a more profitable level. Feature or capitalize on low prices and convenience. Be careful however not to set your prices too low that the customers think your products are inferior.
3) Promotional Pricing:- Set special low prices to introduce new products or a new line. Consider two- for- one specials end of season sales. This method maintains traffic stimulate demand and make room for new merchandise.
4) Loss-Leader Pricing:- Select one item and advertise it at its lowest cost to create store traffic and sell other regularly priced items. Loss-leader pricing is only appropriate for items that already have low margin but can drive sales of accessories or related items.
Read more: http://bizcovering.com/business/the-concept-of-pricing-your-products-or-services/#ixzz1QQ6H1jCS
The first thing that one needs to do to effectively price their product or services is to determine the total costs of the product or service in order to set the theoretical floor for pricing decisions. Material cost, labor cost, and overhead cost institute the total cost of producing a product or service.
Creative Pricing Techniques
1) Skimming Pricing: – Set initial prices relatively high to recover the initial capital spent, developing the product or opening the store. Feature on quality, service or uniqueness. Use this method only if you can capitalize on a current trend or fad.
2) Penetration Price: – Set initial prices low at first to quickly penetrate the market. As business develops gradually raise prices to a more profitable level. Feature or capitalize on low prices and convenience. Be careful however not to set your prices too low that the customers think your products are inferior.
3) Promotional Pricing:- Set special low prices to introduce new products or a new line. Consider two- for- one specials end of season sales. This method maintains traffic stimulate demand and make room for new merchandise.
4) Loss-Leader Pricing:- Select one item and advertise it at its lowest cost to create store traffic and sell other regularly priced items. Loss-leader pricing is only appropriate for items that already have low margin but can drive sales of accessories or related items.
Read more: http://bizcovering.com/business/the-concept-of-pricing-your-products-or-services/#ixzz1QQ6H1jCS
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