Right pricing can help companies tide over recession

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Bikky Khosla | 05 May, 2009
Even as SMEs across the country are fighting for survival, we need to find answers to why some of our competing nations are doing well in the export status, while we are registering negative growth month after month.

Personally I do not agree with this view that we are not receiving inquiries or getting orders...we are. But at the end we are losing these orders to our competitors because of certain reasons - pricing being one. Finding out the best price for the products or services is of vital importance for the survival of any business - big or small.

Most of us are still unaware as to what one's competitors are doing. Pricing in most products of exporters is the reflection of a unilateral decision of the marketing department. This should not be the case.

While deciding on the price of a product, exporters and sellers should take into account a couple of factors. If there is a uniqueness about the product or service one can quote more. But if there is steep competition and there are many sellers for the same product, one should keep a more competitive price and look at ways to lower the cost of production.

Since pricing is done by calculating the fixed and variable costs associated with one's product or service, try to first calculate how much is the cost associated with each item sold or service delivered. Once this is done, one should try to explore ways in which to keep this cost at its lowest minimum.

Now for any seller it is very important to understand one's products and how one wants to position the product in the market. Is my product an exclusive luxury product for a niche market or is it a product that has many manufacturers and sellers? In the first case the seller can fix a high price while in the latter, the price has to be on the lower side otherwise the buyer might approach another seller. In the latter case especially, when one's product is one of the many existing in the market then the law of competition applies.

So before you come up with a price for your products just remember that pricing them at too high a rate or, on the contrary, at a price much lower than its market potential is tantamount to committing hara kiri. No one would like to do that I suppose!