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
Pricing can play an important role in the success or disaster of any product. Too high a price and the product will fail; too low a price and not enough profits will be made to sustain business operations (Hisrich, Peters, & Shepherd, 2014). The key is to make the customer think that they are paying exactly the right price for the product. Anything else though in this regard means the product is not positioned well in the mind of the consumer. First of all, Gril-Kleen will have to decide on what sort of strategy it needs to pursue. This strategy is decided on three factors namely costs, margins and competition.
Of the four P’s in the marketing mix, the pricing strategy is arguably of primary importance. In fact, price is the only element in the marketing mix that generates revenue and drives profitability. The revenue generated by price is also essential to cover the cost of the other three P’s, namely, product, place, and promotion. Therefore, none of the other strategies in the marketing mix would be possible if a company’s pricing strategy does not generate revenue (Hill, 2013). Recognizing the critical importance of an optimal pricing strategy, Cabela’s implemented a SKU level profitability and price optimization system supplied by Revionics Inc. in 2013 (“2013 Annual Report”, 2014).
Based on the textbook and my understanding, whenever there are negotiations between a procurer and a supplier regarding a competitive bidding, the first thing that might be favored is the scope of the project, meaning both will sit down and discuss the entire project prior the work begins. Meanwhile, during the negotiations, evaluation criteria should be clear, and stated and defined. As the evaluation is based on the criteria stated and the procurer can request or ask the supplier’s opinions on certain specifications and where things can be improved.
Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro
Cost-plus pricing lead to a complicated pricing structures, since distributors and customers negotiated separate product prices from manufacturers, introduced incentives, let prices vary from customer to customer, covered some products by contract and some don’t etc.
3. Analyze the best price setting process used to establish sustainable and profitable prices for the
Swing Manufacturing and Steady Manufacturing both operate in the widget industry, but with radically different cost structures. Swing is a capital-intensive, automated manufacturer, while Steady is a labor-intensive "job-shop." Monthly operating data are as follows:
Pricing your products is actually one of the hardest decisions for a new business owner to make. Make the prices too high and no one will want to buy. Make the prices too low and you can't make a profit. Not knowing how to price products properly is a common challenge for new business owner. And it is one that can make or break a company.
Pricing is important when marketing a product. The determining factor for the pricing is the material, time to make, amount spent on marketing and promotion of the product. The goal in providing such a product that is moderately
However, due to the rising competition and growing innovative efforts, a pricing strategy may need to be revised at some point to assure customer affordability and maintain customer loyalty. Quality is firmly identified with return. Low quality items and benefit decreases consumer loyalty and prompts to regular returns, while great items and administration can fulfill the client and lessen the quantity of profits. In the meantime, top notch items and administration merit high offering costs in light of the fact that higher costs flag better quality (Li, Xu, & Li,
The process in which organizations determine what they will obtain in exchange for their products is called pricing. Some significant factors for pricing include Market conditions, competition, market place, cost of production and product quality.
Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).
The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.
There are a number of instances were lowering a price can entice a purchase. One recent instance was with respect to a camera lens that I wanted. This lens was priced at around $200, which was not a bad price. However, it was a little bit more than I wanted to pay. I kept checking the price online at a few different outlets and it changed almost every day. The outlets went back and forth raising and lowering their prices, something I was surprised about. The price finally hit $150 at one of the outlets and I bought.
Today’s highly competitive business world forces companies to create different tactics and relatively rely on multiple pricing strategies to conduct business.