Pricing decision in business market

Jul 19 • General • 3094 Views • No Comments on Pricing decision in business market

Pricing is another important decision that needs to be considered in the business market. There are various factors that affect the pricing decision in the business market. Some of the factors that influence the pricing decisions are as follows :-

  • The objective of the pricing
  • Analyzing the demand of the product
  • Analyzing the cost of the company
  • Analyzing the competitors pricing policy
  • Government policies and laws                     Pricing decision in business market

Deciding on the pricing objective

  • The pricing objective should be based on the marketing objective
  • Price can be decided on the company’s profit strategy that can be long or short term
  • Increasing the sales of the company
  • Fighting the competition
  • Fair pricing for the customers
  • Achieving leadership in the quality of the product

Pricing methods

There are mainly three types of pricing methods that are used by the marketers. These           methods are : –

  • Cost-based pricing- In this method the marketer analyse the cost that is incurred during the production process of that product then add to it little profit margin and then decide on the total price of the product that the customer has to pay.
  • Valued-based pricing- In this method of pricing, the price of the product is based on the value that it delivers to the customer, that is the price of the product is worth the value delivered by it to the end users.
  • Competition-based pricing- In this method the price of the product is decided on the basis of the price that is used by the competitor for the similar type of product in order to increase the sales and market share of the product category.

Pricing of a new product

For pricing of a new product two main strategies are used by the marketers. These two strategies are :-

Skimming strategy – In this type of pricing strategy ,at the initial stage the price of the product is kept high, unique and then the price of the product is reduced to gain access to other market segments.

Penetration Strategy- In this type of pricing strategy  initially the price of the product is kept low in order to gain more customers than that of the competitor. This pricing strategy is used for the customers who are highly price sensitive.

Pricing in stages of PLC

Introduction stage

  • The price is low to gain access to new markets

Growth stage

  • In this stage the price is low to fight competition

Maturity stage

  • Prices are much lower to retain the customers

Decline stage

  • Price is stable

 

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