An effective pricing policy is an essential element of a successful business. Correct retail pricing helps to ensure the required sales volume and achieve the level of profitability.
Instructions
Step 1
First, determine what price the buyer sees as appropriate for the product under study. In this case, consider not only the same products, but also products that are analogues of yours. Collect all available pricing information and analyze it. You may encounter difficulty if you turn to products and services for industrial and technical purposes, since in this case the actual prices and tariffs may be higher or lower than the list price, and in most cases you will not know about it in any way.
Step 2
Write down all the parameters that distinguish your product from similar and alternative products. Include items such as main property, reliability, additional properties, maintenance and commissioning costs. Conduct a comparative assessment of the values of these parameters for different products and find the difference with yours. Thus, you will analyze how competitive your product is in terms of quality, and highlight its main advantages and disadvantages.
Step 3
Find the value of the difference in the parameters of your and alternative consumer products. If a product is of no value to a person, he will not buy it. For each property, the benefits for the buyer will be different. Consider whether your target audience is ready to pay more money for improved parameters, and if so, how much more. There is always a danger that some of your potential or existing buyers will be attracted by the reduced prices of competitors for lower quality goods. Through this research, you will determine how valuable the benefits of this product are to consumers.
Step 4
Add to the price of an alternative product the value of your product's differences from it. So you will get the level of economic value of your products, that is, you will find out how much consumers are willing to pay for your product, given its unique properties. Focus on this indicator when calculating the price of a product. Depending on your goals, objectives and strategy, the cost of the product can be higher or lower than the economic value.
