The Art and Impact of Pricing

Pricing is the litmus test of every company.

A company can offer the best qualitative product or service with excellent packaging and promotion, but if the price is not right, the company will sell next to nothing.

It is common knowledge that 90% of all product ideas and innovations fail with a resulting “product graveyard” where probably half of the products simply have been poorly priced.

Significance of Pricing

Setting the “right” price for any product or service is always a balancing act. A lower price is not necessarily always ideal, as the product might see a healthy stream of sales without turning any profit. Conversely, a high price might hinder budget-conscious customers from buying at all. In the end, pricing is seen as placing a value on a business’s product or service.

Factors that Influence Pricing

Ultimately, however small or large, every business must find and develop the right pricing strategy for its products and goals. Companies must consider internal factors like:

• Production costs
• Logistic costs
• Revenue goals
• Margin goals

But even more important are often external factors such as:

• Inflation
• Consumer trends
• Image
• Awareness
• Competitor prices
• Supply shortages
• Consumer perceptions

But even if a company had full information…