Pricing And Direct Pricing Strategy

This statement reflects on how much consumers are willing to pay for the value of a product. I believe that depending on the quality of a product, the consumer will know how much roughly the product is worth.

One major factor that affects a buyer’s choice is price. Price is defined as the value spent on a product or service. This is also one of the 4p’s. (Product, Promotion, Place and Price) However, even though the other p’s don’t necessarily give you revenue, price is what drives a product for success and increase profits in a business. Pricing is a big element in a business because marketers use this a tactic to catch customer value. Cost-based pricing is estimating how much a product should be priced at. Within the cost based pricing system there are two other forms of estimating how much a product should be price at. These are Full Cost Pricing and Direct Cost Pricing. The full cost pricing is the variable, fixed costs and the percentage markup. On the other hand, Direct Cost Pricing is the variable cost and a percentage markup all together.
Moreover, there are many pricing strategies that businesses have. One of them could be Penetration Pricing. This is used at the start of launching a product. This strategy is when a business launches its product at a low price to entice new customers to change over to the product that …show more content…
Competition pricing is when a business sets the same charges, as other competitors. It’s mainly used for products, which don’t differ from each other much, but there’s a wider choice. This can be very beneficial because it can steer clear of price competition, which can result in business damage. Additionally, a customer’s perspective can be changed. Although, the drawbacks of competition pricing is that companies have to entice customers more by using other methods as a result to the price set by the business. Also, this strategy can only cover production costs, which can result in a loss of