Hotline: 1800 102 2007
X
Loading
Search Business Opportunities
2009-12-02

Price them Right

Product pricing is the most crucial aspect of marketing. A look at key pricing strategies to be kept in mind.

Pricing, the most important element among the 4Ps, needs special attention as this determines the profit margin of any business. Industry experts feel that if a company wants to sustain a business and grow, it must give emphasis to its product’s pricing.

 

 “Price of a product should be determined keeping in mind what the customer perceives to be fair”, feels Alkesh Agarwal, CEO, Refeel Cartridge Engineering Pvt. Ltd. “It should be in proportion to the value it offers” says Sunil Cherian, Founder, Burgerman, a fast food outlet of burgers and hotdogs. Your offerings should be priced in such a way that it covers your manufacturing costs but should not be high enough to let your competitors gain advantage and you end up losing your customers.

 

 

Key Pricing Strategies

 

   

1. Penetration pricing

If your company is entering a new market, it becomes very important to price your product in such a way that it helps you to widely penetrate into the market. Think less in terms of making profits and more in terms of reaching out to a large section of people while pricing your product. Renowned fast food chain, McDonalds used this strategy to reach out to a large target group in India by reducing their burger’s price to just Rs 20.

 

2. Competitive pricing

If your company is producing a commodity or service, which has many competitors, then your pricing strategy should be to lure away your customers from your competitors. This can simply be done by lowering your product’s price, comparitively. Price it such that it just covers your manufacturing costs. “We did a good research to understand the pricing of various products of our competitors before coming out with our product’s price. We wanted it to be affordable to our target customers, says Cherian.

 

3. Product-line pricing and offers/schemes

In order to have an edge over your competitors, you can come out with schemes such as cash discount, discount on bulk purchasing (trade discount), offers like buy-one-get-one-free, or any other innovative means. You can also club two or more products, offered at a concessional rate. “Offers and schemes are important to generate excitement amongst customers” avers Agarwal.

 

4. Price leadership or premium pricing

If you think your product or service is unique and no other company offers a similar product then you can price it according to your evaluation of current demand and its future growth. An only cable operator in a particular area can always increase the subscription fees because he does not have a competitor.

 

5. Understand Consumer Psychology

“Price, sometimes, is perceived as an indicator of the product’s quality, so it becomes very important to understand the psychology of your end customers before zeroing in on any strategy.

 

 

Related opportunities
  • Bakery & Confectionary
    Become a part of India’s largest Bakery & Confectionary Chain..
    Locations looking for expansion Tamil Nadu
    Establishment year 1994
    Franchising Launch Date 2014
    Investment size Rs. 10lac - 20lac
    Space required 150 - 250 Sq.ft
    Franchise Outlets -NA-
    Franchise Type Unit, Multiunit
    Headquater Chennai Tamil Nadu
  • Competitive Exam Coaching Institute
    Want to be an entrepreneur in education sector? IBT Institute..
    Locations looking for expansion New Delhi
    Establishment year 2008
    Franchising Launch Date 2009
    Investment size Rs. 2lac - 5lac
    Space required 800 - 1000 sq.ft.
    Franchise Outlets -NA-
    Franchise Type Unit, Multiunit
    Headquater Central Delhi New Delhi
  • CAN YOU THINK OF ANY NEW TECHNOLOGIES LIKE COMPUTERS ,..
    Locations looking for expansion Tamil Nadu
    Establishment year 2005
    Franchising Launch Date 2017
    Investment size Rs. 10lac - 20lac
    Space required -NA-
    Franchise Outlets -NA-
    Franchise Type Unit, Multiunit
    Headquater Chennai Tamil Nadu
  • Business
    MedzOne – Asia’s No.1 Medical Shop NetworkINTRODUCTIONMedZone*, is India’s most..
    Locations looking for expansion Chandigarh
    Establishment year 2000
    Franchising Launch Date 2015
    Investment size Rs. 50 K - 2lac
    Space required -NA-
    Franchise Outlets -NA-
    Franchise Type Unit, Multiunit
    Headquater chandigarh Chandigarh
Insta-Subscribe to
The Franchising World
Magazine
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
OR Click here to Subscribe Online
Daily Updates
Submit your email address to receive the latest updates on news & host of opportunities