Pricing Appropriately

The first parameter that usually fix a company to fix the price is the cost. Discusses much that product (even so, fit already at this point different interpretations), and on it a margin is added and is now!, we have the price. Not exactly, actually the majority of the companies comes a little beyond, and examines what are the prices of the competition for similar products. We already have another parameter. A third point taken into account by some margins, i.e., to study if the benefit that leaves the product is sufficiently consistent with the structure of the company. So far, that tend to look at most of the companies. However, the most advanced try relate the price with the value that brings the product to the customer, and therefore routed their strategies to appropriately communicate that value. In this way, they already set a positioning for the product.

So, suppose that we are going to buy wine at the supermarket. Liter there from a euro up to more than 30 euros per (three-quarters of a liter) bottle. Instinctively, we grouped them at various intervals (for example, less than two euros, two to five, six to twelve, thirteen to twenty, and twenty euros), and each of them we attribute a quality. Pricing strategy can also be determined by the time in which the market is located. If we only look at the cost, probably our prices tend to be too low in expanding markets and too high in mature markets. For example, when Danone launches its Danacol products that help combat cholesterol, a high price can afford, since he has no competition and is an expanding market (people want to take care of).

However, if the market became mature, and is equivalent to today’s yogurts, competition pull those prices down. And note that here I’m not talking at all costs of production, simply is a matter of the phase in which the market is located. Therefore, in addition to costs, margins and competition, the company must ask what is the value that the client perceives for that product, in that format, in that location on occasions, if possible, is convenient to perform a market study to learn how much they are willing to pay customers for a product of this type.