How to set the price?

Anyone is designed to bring profit to the owner. In many ways, the profitability of the enterprise depends on how correctly the price was set for finished products.

Competent pricing is a complex process in which various factors and conditions play an important role. Therefore, it is important to know how to set the price for the goods.

Skimming or cream method

For a new product that has no competitors in the market, skimming or the cream method is often used. At the same time, the manufacturer sets the maximum possible price for the products. Such an approach allows not only to cover all production costs, but also to get an instant good profit with minimal sales volumes. Using this method is reasonable if:

  • the product has impeccable quality;
  • high competitiveness of products;
  • high starting costs of production;
  • steady demand among the population with a high level of income;
  • high price does not scare buyers.

As the market is saturated with goods of this type, consumer demand inevitably falls, which leads to a regular price reduction.This method is effective for products of exclusive type, the demand for which is beyond doubt.

Market promotion

To promote a new product that is not known to a wide consumer audience, another method is used for marketing purposes. For this, the manufacturer sets a low enough price so that in a short time to attract the attention of buyers to the product. Thus, products are rapidly becoming popular, which makes it possible to increase the cost of goods over time.

The danger of this method lies in the fact that in the absence of demand, the manufacturer risks breaking up. The likelihood of a bankruptcy business is reduced if the manufacturer quickly focuses on the current market and is able to predict the behavior of a new product. The growing consumer demand and large sales volumes make it possible to get good income for a certain period of time, more than covering the starting costs of renting premises, production, wages for employees, etc.

Method of surcharges and markups

The method of allowances and markups in accordance with the realities of the modern market is recognized as more efficient and long-term in business.In particular, pricing is widely practiced in commerce: price = purchase price of goods + mark-up.

The amount of mark-up or surcharge varies widely and depends on the type of goods. For example, for food products there is a reasonable 25% surcharge on the wholesale cost of goods. Similarly, for jewelry and household goods - up to 100%, for auto parts - from 30 to 60%. At the same time, it is necessary to take into account the price of competitive products in order not to lose the interest of the consumer audience.

In general, the process of pricing for different goods may vary significantly. Individual approach to pricing a particular product is based on a mathematical analysis of the market. Here it is necessary to take into account such factors as the uniqueness of the product, competitiveness, inflation, the influence of sales markets.

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