However, a products pricing is different for different situations. For example, sometimes in business deals price is fixed by the seller. He may demand $8 for a pair of shoes. It is a fixed price but sometimes price is fixed by the negotiations between seller and the purchaser.
Product’s price may also be decided by the competition between sellers. It happens when a seller changes or lower products price than his competitor to sell more. This technique requires aggressive and often changes in price. In a business, the customer's approach limitations must be considered. As there is a class of people who does not care about prices but there must be some buyers who try to buy a product in a reasonable amount.
Quality of the product also plays an important role in making buyers mind. They may consider high-quality product to be an expensive, but there are some buyers who relate high price as a symbol of high quality. As far as sellers approach is concerned some sellers or organizations considers costs or price as a symbol of status. They demand a higher price than actual to maintain their standard. This mindset also exists.
Any organization or business company has to put prices on their products to survive, to make a profit and to increase target return on investment. There are some techniques or strategies of pricing a product. These strategies of product pricing design ways to achieve marketing target.
New price strategy includes a pricing of new products in the market. It is further divided into two strategies price skimming and penetration pricing. Price skimming is a technique of increasing price as some buyers are willing to pay a high amount for a new product. So this strategy targets this kind of buyers. Penetrating pricing is about lowering the price of the product to increase its sell. Negotiation pricing as a name says includes bargaining. Secondary-Market pricing is about creating a variation in the price of the same product in different markets.Periodic pricing is a short-term pricing strategy. It includes a price reduction on a temporary basis.
This article discusses almost every aspect of pricing in the business. It provides relevant and authentic information about products pricing. The strategies and mindsets discussed in this article are authentic and realistic and are very important as far as marketing or business management is concerned. If product is not priced properly then the business will not run as it is the most important factor in business management.
Griffin, Ronald J. Ebert, and W. Ricky."Business Essentials-8/E." (2011).