Different Types of Pricing Strategy

Posted September 16th, 2016 by Damian Bogut. Comments Off on Different Types of Pricing Strategy.

How does your small business choose your pricing strategies? Do higher prices automatically result in higher profits? Do price increases always result in higher total revenues? How do companies that opt for premium pricing compare to firms that opt for volume?

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These strategic policy questions relate to the optimal price points of your startup business – the appropriate mix of value propositions that maximises net income and thus the return on investment while minimising the cost of operations, simultaneously.

First, let us define what PRICE is. The price is the monetary value set by an organisation at a level they believe is worthy of their offering. However, if a customer wants a product, but the price is too high, their value analysis of the trade is lower than the price set and they won’t make a trade. Pricing and customer value are closely linked. Basically stated, the value a customer places in a product and brand is indicated by how much they are willing to give up, usually in the form of money.

To know how much your product or service should cost, you must know the basic rule price and demand or also known as price elasticity. The price of a particular product directly impacts on the amount of demand it receives from customers. The actual relationship is known as the economic term of price elasticity.

Read more at: http://smallbusiness.chron.com/different-types-pricing-strategy-4688.html