![]() How do you choose a pricing objective? Pricing objectives are selected with the business and financial goals in mind. As business and market conditions change, adjusting your pricing objective may be necessary or appropriate. Your choice of an objective does not tie you to it for all time. You'll need to have a firm understanding of product attributes and the market to decide which pricing objective to employ. The one you select will guide your choice of pricing strategy. Many pricing objectives are available for careful consideration. You'll notice that some strategies can be employed with more than one objective. At the end of this publication you will find a diagram illustrating pricing objectives and the strategies that can be employed to meet each objective. Be familiar with any pricing regulations that apply to your industry or product.Ĭertain combinations of an objective and strategies work together while other combinations contradict each other. Are there other entities, such as the government, that may dictate the price range for your product? Some products, such as milk, have government-imposed regulations limiting the price that can be charged.For example, consider the prices people are willing to pay when new video game consoles debut. What is the projected demand for the product? When demand for a product is expected to be high, you have more flexibility in choosing pricing strategies because customers are less likely to be concerned with price and packaging since they really want your product.Longer life cycles give you more time to achieve your pricing objective. With a short estimated life cycle, it will be necessary to sell greater quantities of product or generate larger profit margins than with products where the life cycle is longer. ![]()
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