Business plan pricing policy of a company

Strategic Analysis with current research! The Automotive Repair Shop, Inc.

Business plan pricing policy of a company

The objectives of pricing should consider: Where manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaignsthen prices are likely to be higher.

Price can act as a substitute for product quality, effective promotions, or an energetic selling effort by distributors in certain markets. From the marketer's point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay.

In economic terms, it is a price that shifts most of the consumer economic surplus to the producer. A good pricing strategy would be the one which could balance between the price floor the price below which the organization ends up in losses and the price ceiling the price by which the organization experiences a no-demand situation.

Pricing strategies Marketers develop an overall pricing strategy that is consistent with the organisation's mission and values.

This pricing strategy typically becomes part of the company's overall long-term strategic plan. The strategy is designed to provide broad guidance for price-setters and ensures that the pricing strategy is consistent with other elements of the marketing plan.

While the actual price of goods or services may vary in response to different conditions, the broad approach to pricing i. The pricing strategy established the overall, long-term goals of the pricing function, without specifying an actual price-point.

business plan pricing policy of a company

In some cases, prices might be set to de-market. The aim of value-based pricing is to reinforce the overall positioning strategy e. Where the objective is to encourage or discourage specific social attitudes and behaviours. Tactical pricing decisions are shorter term prices, designed to accomplish specific short-term goals.

The tactical approach to pricing may vary from time to time, depending on a range of internal considerations e. Accordingly, a number of different pricing tactics may be employed in the course of a single planning period or across a single year.

What's next?

Typically line managers are given the latitude necessary to vary individual prices providing that they operate within the broad strategic approach. For example, some premium brands never offer discounts because the use of low prices may tarnish the brand image. Instead of discounting, premium brands are more likely to offer customer value through price-bundling or give-aways.

When setting individual prices, decision-makers require a solid understanding of pricing economics, notably break-even analysis[7] as well as an appreciation of the psychological aspects of consumer decision-making including reservation pricesceiling prices and floor prices.

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The marketing literature identifies literally hundreds of pricing tactics. Rao and Kartono carried out a cross-cultural study to identify the pricing strategies and tactics that are most widely used.

In such cases, complementary pricing may be considered.You start with a free trial. We don’t collect your credit card until you’ve determined Squarespace is the right product for you. Marketing Strategy Business Plan.

Updated for 2012

Large company skill and small business experience. To develop good business strategies, perform a SWOT analysis of your business.

It's easy with our free guide and template. Learn how to perform a SWOT analysis. Pricing Strategy/5(68). Use this Pricing Strategy form to help you calculate your costs in assigning a price to your products.

Free to download and print. Definition of pricing policy: The policy by which a company determines the wholesale and retail prices for its products or services. See also pricing strategy. Dictionary Term of the Day Articles Subjects.

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