Pricing Tolerance
Pricing Tolerance
Pricing tolerance is the optimized price of
the product to sell in the market. The key to company success is pricing the product
properly. If the product is underpriced, the company is losing the profit
margin and if the product is overpriced, customers are not willing to buy the
product.
There are different types
of pricing strategies in business. Pricing the product usually involves certain
key factors like target customer, competitors, quality, and price.
How to give product price? Before tag,
the price company would have to do exercise.
Know the market:- survey,
the voice of customers, and competitor’s price on a similar product. That gives the general idea for understanding the range of
different prices and products. But not only considering this, but the company also
has to look at their product efficiency, high quality, direct cost, and indirect
cost, otherwise the company has to face potential risk in the profit.
Know product cost:
- Before tagging, the price company has
to know the product cost, overhead cost, and admin cost like marketing,
accounting. The company has to understand the product demand and break-even
point.
Monitor
Your Pricing: - Company has to monitor the product cost continuously and
profitability on a monthly basis. The company has to keep eye on the competitors’
products and prices.
The
company has to play the pricing strategies to improve the profit margin. The company
sets an initial high price and then declines low price to make the product available
in a global market.
Cost-Based
Pricing: - The total costs and percentage markup to make a product to determine
the final price.
Cost + % markup = Price
This
method is quick and fast to get the final price.
Market
Oriented Pricing: - Depending on the competitors the product price
will be higher and lower.
Product
Cost, Quality, and Customer
The company
has to understand the product cost of manufacturability and also quality
compared to competitors to the accurate price of the product.
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