Instructions on Accounting and Planning Pricing Strategies in Business Organizations
Pricing is one of the most important as well as challenging tasks for any business organizations regardless of small or large scale. The profit of the company mainly depends on the pricing strategy. This article is mainly for the readers who want to get an effective pricing strategy for their business by means of giving more insight and instructions. High price and Low pricing plans are the major classification of pricing strategies in business.
The high pricing strategy is generally known as creaming or skimming which refers to pricing and promoting the product in the market with high price range in order to attain more profit. It is also important for the company to make sure that there is no competition for the same product in market. The innovative and uniqueness are the major factors which improves the success of the product in the market and it should also be patent protected by the company to prevent copying from competitors.
Premium pricing is the second strategy in high price planning in business. This strategy mainly deals with improving the quality of the product in order to justify its higher price range. It significantly improves its success among customers. Companies need to realize the fact that the customers are always willing to pay high price for high quality products in the market. This factor encourages the companies to improve their quality of the product before increasing the price range. It also significantly enhances the reputation of the small companies among their target customers. The fashion and perfume industries are the prime examples for this strategy as they introduce their high quality products to get customer attraction which justifies the higher price. The brand name of the company is also plays an important role in this premium pricing strategy.
Promotion pricing method is one among the low pricing strategies in business. The price of the product is considerably reduced in this strategy by the companies in order to increase the customer base in the market in a short term. This will help the company to gain more profit in the future with their huge quantity of customers. It also creates positive reputation of the company among its customers. This strategy significantly eliminates the competition of other companies by means of selling products with low price range to the customers in the market.
Loss leader is certainly one of the effective methods in low pricing strategies for any company. This strategy assist the company to get their desirable market penetration and overcome their competition by means of reducing the price of the product to larger extent sometime below the actual cost of the product. The loss due to this strategy can be compensated after achieving their goal in the market.
It is also highly recommended for the companies to give more importance to the plans such as cost effectiveness, profit level, market analysis, legal issues, major goal of the product or service in the market and organizing the plan according to the exact business needs etc., It is also important for the company to choose the pricing strategy according to the current situation and long term benefits. The reputation and size of the company also plays their part in determining the pricing strategies such low pricing and high pricing plans in any business.
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