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Pricing strategy - can't do without one!
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Bikky Khosla | 23 Feb, 2010
Without doubt pricing strategy for small and medium enterprises (SMEs) determines the fate of their businesses. An effective pricing strategy that reflects the various aspects of one's target buyers, all the same, enabling the SME to remain competitive in today's volatile market trends is the need of the hour. Calculating one's price, cost mix, and the competitive nature of the products that are being sold are crucial to the development of a winning strategy.
For an SME it is of utmost necesity to first identify markets that fetch the best possible price for the product before setting a price for the product or service. Invariably, there will be a market or a market segment where SMEs can get a higher price. The trick is to find it and take advantage of it.
Having said that, identifying the most profitable market is not an easy task and requires meticulous planning. SMEs today need to understand that performing market research on potential customers and distributors before determining the price of the products is not just an alternative. Rather, it's a necessity. Doing this, I believe will help understand the specific criteria that lead people to purchase a specific product.
Invariably there must also be a balance between the cost for a buyer and the product's value. SMEs ideally think that keeping the price of the product or service lower will attract more customers. However, that might not be the case always. For high-value products, keeping the price too low might turn off potential customers instead. Moreover if there is high demand for a particular product, keeping the price low means losing out on earnings.
Anyone can tell you that until and unless you have competitive prices for your products, you do not stand a chance in the market. But the question before SMEs is "how to quote the right price?"
The best possible tested and tried method while pricing products is to thoroughly study the market trends before jumping into the fray. Know the actual market value of the product, be aware of the competitors and the distribution costs, conduct a detailed study on the prices of the same products the competitors are selling â these can give SMEs a fair idea as to what the prices should be.
Try this next time and I assure you that you will be doing more business.
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price strategy
VAIBHAV SAWANT | Thu Feb 25 05:37:51 2010
i am happy to read this article .i had a major problem while introducing my product to the market. i am into manufacturing of bearings required for hardware fitments.recently i developed a 625zz bearing.the imported bearing cost app RS 5/- AND MY MANUFACTURING COST IS APP RS 2.5/- BUT THERE IS A DIFFERENCE IN MATERIAL BUT THE MARKET WONT REALISE IT AS IT IS MOULDED WITH PLASTIC SO NO MUCH CHANCE FOR REALISATION WHAT PRICE IS HOULD FIX FOR THE PRODUCT ITS USED IN WINDOW BEARINGS AND HAS A HUGE POTENTIAL FOR THE PRODUCT WITH CONSTRUCTION AT FAST PACE.I HAVE NOT BEEN ABLE TO LAUNCH THE PRODUCT IN MARKET ONLY BCZ NOT KNOWING WHAT PRICE I SHOULD LAUNCH THE PRODUCT.
WINDOW BEARING PLASTIC MOULDED ON IMPORTED 625ZZ IS RS 8/-APP AND MY PRODUCT 625ZZ LOCAL MAKE MLOULDED MANUFACTURING COST COMES TO RS 4.5/- WHAT PRICE I SHOULD FIX TO SELL THE PRODUCT AND WHAT PROFIT OF MARGIN ALSO TH PRODUCT INDIAN 625ZZ MY MAKE IS A NOVELTY AND I HAVE THE INTERNAL CAGE DESIGN REGISTERED SO THE CHANCES OF PRODUCT COPIED IS VERY LESS
Price strategy
David Doehlert, TEC, USA | Thu Feb 25 02:12:28 2010
I praise your insight in both under pricing and undervaluing products. The market will eliminate bad products, as well as under priced high quality products. Thank You.
perfect point
Rama S | Wed Feb 24 08:56:08 2010
the article is just right and rightly points the mistakes many SMEs might make, but again as pointed out by other reader, SMEs do not have resource to understand the pricing of the competitor
Pricing strategy - can't do without one!
Rajib Kumar Dutta | Wed Feb 24 05:28:24 2010
I agree to the strategy in principle. However, most of the SME does not have resources to collect, analyze relevant data and come to the appropriate pricing. How they can be helped?
Pricing strategy - can't do without one!
r.k.gupta | Wed Feb 24 03:35:51 2010
Sir
what an amazingly very true in simple lay mans language you have touched and explained the pricing stategy.
kudos to you.
your ample experience with practical approch always is of imence value.
kind regards
Price depends on value
Steven Forth LeveragePoint | Wed Feb 24 03:26:36 2010
The key to getting a good price is to provide value, and to provide value you have to understand the impact you have on your customer's business and what the next best competitive alternative is. Model value, communicate value, then capture value.
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Re: Price depends on value
Dave Doehlert, TEC, USA | Thu Feb 25 02:17:37 2010
As a technician rather than a marketing expert I wonder if you can suggest how I might gain insight on remote market model value. I know that my products are the best, but that is not always what the market wants. DD
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