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A Company 's Pricing Strategy

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A company’s pricing strategy can offer a low price to stimulate demand and be able to gain market share as it focuses on specific economies in administration, production and marketing, striving to be as lean as it can without diminishing the overall level of quality it chooses to produce and be known for in the market (Heiman, 2010). One of the many difficult decisions a company has is to have a detail understanding of planning the costs that are involved in producing a product, delivery, service as well as factoring in the organization to set their pricing. Therefore, a critical component of the pricing is to understand the market demand, life cycle and the competitors actions would assist in deciding how to price your products and…show more content…
The first step in pricing is the consideration of the product production cost or service delivery cost as a unit cost. The calculations is the cost of acquiring raw materials, cost of manufacturing, handling costs and other costs that may be involved (Benton, 2014). For instance, if the product will require to be transported to a customer; hence, the shipping cost should also be included as well. The next one is having a competitive bidding process in order to determine which supplier can meet the requirements of the buyer at the lowest price. In order for a company to be determine they must enter a competitive bidding which aims at obtaining their goods and services at the lowest prices and further avoids favoritism in a procurement method in which competitive vendors, contractors and suppliers are invited to advertise and evaluate the scope, terms and conditions and specifications of the proposed contract as well as the criteria in which they evaluate and provide their feedback (Johnstone, Bedard & Ettredge, 2004). Therefore, suppliers should ensure that their bid covers any associated costs and reflect that they can indeed offer the best value and an organization should be
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