A Brief Look Into 5 Major Pricing Strategies In Marketing

One can define pricing strategies as the pricing method that a business uses to determine the prices to sell its products and services to generate sufficient revenue to justify its existence. Pricing a product or service is one of the most common essential aspects of a marketing strategy. For marketing students, pricing strategy assignment help them understand the essentiality of innovative pricing and all the factors involved.

An acute pricing strategy plays a critical role in a business's success. Companies often utilized several pricing strategies while marketing or selling their products and services. Any and every pricing strategy has the following central objectives:

• Survival and Sustainment
• Profit Maximization
• Targeted Return
• Market shares
• Status Quo
• Competition

To achieve all of the above as necessary, businesses need to undertake a lot of trial and error while construing their prices.

Common Pricing Strategies

Selecting the correct pricing strategy requires a deep understanding of the product, market, and the consumer. Deciding the prices at which to charge for a product is not just limited to calculating the costs involved and then adding a label to it.

One should remember that the amount of money a customer is willing to pay for something has very little to do with its manufacturing & overhead costs. It has everything to do with the value they attach to the product or service they intend to buy. The scenarios presented in a pricing strategy assignment can help you realize exactly why this is the case and come across the critical factors involved.

Some of the most common pricing strategies utilized in the business across sectors are given below. There is a high probability you will need to use several of these strategies while doing your pricing strategy assignments.

1. Cost-plus pricing involves calculating the entity's costs and adding a markup with an aim at profit generation.

This particular strategy focuses on acquiring the cost of producing the product or service. Cost-plus pricing is sometimes called "markup" pricing, as businesses use this strategy to decide how much they would like to profit from a product.

Cost-plus pricing is not suitable for service-based or SaaS companies as their products have a more excellent value than just the cost of manufacturing them.

2. Competitive or competitor based pricing is all about setting prices to help a business trump its rivals in sales. Competitive pricing strategy works on the existing market or going rate of a specific product or service.

While following a competition-based pricing strategy, a business sets the competitor's prices as the benchmark. Set your prices lower or higher than your competition as per market scenario and keep your costs dynamic to stay above the competition.

3. Skimming Pricing strategy comes into play when a business charges the highest possible price for a new product and then gradually lowers the cost over time with decreasing product popularity.

Technological products are priced using this strategy as they tend to become less relevant over a certain period. Skimming pricing strategies help businesses recover sunken costs, but high prices can annoy consumers. Competitors can also recognize the "fake" price margin once prices are lowered drastically.

4. Dynamic Pricing Strategy also called surge, demand, or time-based pricing is a versatile pricing strategy where prices fluctuate as per market and consumer demand.

Sectors such as hotels, airlines, event venues, and utility companies use dynamic pricing algorithms to generate product prices. These algorithms consider competitor pricing, demand, and several other factors, allowing companies to modify their prices as per market demand and consumer mindset.

5. When companies enter a market with a low price, the penetration pricing strategy intends to draw attention away from the higher-priced competitors. Penetration pricing is only viable for a short period and works best for businesses looking for customers or planning to break into a new, competitive market.

And that's all the space we have for today. Studying different pricing strategies and their applications in depth is essential for every sales and marketing student.

Remember to drop a "Can you do my pricing strategy assignment?" request with reputed paper writing services only, if you ever need any help with pricing strategy assignments.

Jacob Ryan is a marketing professor from San Francisco, California. He is also a part-time academic tutor and offers excellent writing services to students, only at MyAssignmenthelp.com.