This topic is essentially to help you in considering what are the factors when deciding your price strategy. Price plays a very important role in the marketing mix as price not only determine’s the product’s value but pricing too high could lead to loss of sales whereas pricing too low would essentially lead you to loss of potential profits
Hence, getting the right price for your product is pretty important. So what are the factors that you need to take into consideration when deciding your pricing strategy? Here are some of the points that you would need to consider
Government Regulations
For some items especially essential items, some government have regulations on the ceiling price. Specifically in Malaysia, sometimes during festive season you may also observe that there would be set prices guidelines from the government. Make sure your selling price is within the government’s regulations
Your Competitor’s Price
How would you like to position your product? Competitive pricing? Premium Pricing? Or Low Pricing? Identifying your competitors would give you an idea of the price range that you can set for your product
Product Cost
Naturally you need to calculate your product costing so you can know what is the minimum price to set for the break even point. Its important to also consider if the product cost would increase in the short term as you do not want to announce a price increase 6 months or 1 year after you have just launched your product. Not a great idea to do a price increase especially right after a product launch in the short term unless its unavoidable
Pricing Objectives
Setting your pricing objectives right so that your pricing strategy will follow the objectives. Be it you would like to maximize your profits and minimal profits, this would be reflected in your product price
Demand and Supply
Naturally you need to also consider the demand and supply of the market. If you are selling something of high demand but has little supply, you could maximize your profits through selling at a higher price and vice versa
Marketing Plan
Include a percentage of budget in your price in order to support your marketing plan. With this, you will be able to plan a feasible marketing plan in which the cost will be supported by the sales of the product.
