Setting Product or Service Prices

When a business can provide a lower cost, then the business can have the ability to lower their price. Providing a better pricing system, along with sharp value products can only increase the chance of growth and customers’ overtime.

I will then make sure I create value for each customer segment and create a pricing structure that will align price with the value delivered. On the other hand, most of the customers usually perceive that the higher the price charged, the higher the value is attached to the goods they purchase or services offered. This also becomes a cutting edge in determining the pricing strategy to use as I anticipate my clients to perceive what I offer them to be of a high value.

The key to successful pricing is to match the product with the consumer's perception of value.

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.

The setting of ‘fair’ prices to consumers: the company should bear in mind that customers nowadays will shop around to compare the intended products and services. However for the business survival and growth purposes, the company should also maintain its profit margins to ensure its business growth and expansion. The company needs to consider its cost factors and business operation areas to reduce or minimise the costing areas.

Health Care firms must set rates at levels sufficient to maintain their financial visibility. The areas that prices need to be set on is : Average cost, Losses on third party fee schedule payments, Medicaid, Medicare, other, Discounts on billed charged patients, Self-pay, Commercial, Reasonable return on investments, Sustainable Growth. Failure to develop pricing to cover all these areas will end up with failure. (p.141,1142

Pricing strategy associated with services is typically more complex than the pricing of tangible goods. As a consumer, what pricing issues do you consider when purchasing services? How difficult is it to compare prices among competing services, or to determine the complete price of the service before purchase? What could service providers do to solve these issues?

According to Vivian Guo (2012), Cost-plus pricing is the simplest and oldest method of determining price and provide the basis for doing business. For calculating this price we need add together the direct labour cost, direct material cost, selling and administrative costs, and overhead costs for a product. Then we need to add to it a markup percentage (AccountingTools, 2016). The pricing formula is:

I will be explaining four steps for setting an initial price for a product or service, which are selecting the pricing objective, estimating cost, selecting a pricing method, and determining demand. I will be explaining four ways an organization can respond to a

(Market Concentration, 2015). In researching the market conduct since implementation of the ACA, the literary resources where few and far between when giving a concrete definition of the ACA’s impact to date. However previous articles when compare to the statistics before 2010 shed some light on the efficacy of this reform. To begin evaluating market conduct we explore pricing in the current economy.Price is the amount that an individual pays for a service or a product usually driven by the market of the product and the need for those services. The cost for the majority of people is a determining factor on which brand or product you are going to purchase and this goes the same for patients or consumers who have to make healthcare decisions based off of price. One study provided by The Health Care Cost Institute (a new, national database provided currently by Aetna, Humana, Kaiser Permanente, and United) would suggest prices are now the main driver of health care costs increases. In a study in which the HCCI published results for 2010 spending, they found overall, per capita spending was up 3.3%, with utilization at -5%. This increase was due to price increases such as inpatient care of 5.1 percent, ER visits of 11 percent and professional services of 2.6 percent. Evidence of recent moderation in hospital price growth provided by the Altarum Institute Price Brief for September 2012 shows health care price inflation has increased at 1.9 percent each year, and shows it has

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.

To determine the price for the product or service, the firm must understand the costs for running the business. If the price is not enough to recover costs, the cash flow will be negative and the business will fail.

Pricing is the method adopted by a firm to set its selling price. Pricing usually depends on the firm average costs and on customer perceived value of the product in comparison to his or her perceived value of the competing product.

Pricing is one of the four elements of the marketing mix, along with product, place and promotion. Pricing strategy is important for companies who wish to achieve success by finding the price point where they can maximize sales and profits. Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives.

• There are several factors that need to be taken under consideration before deciding your product pricing strategy.