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Price is one of the major concerns of an individual when he ventures forth to purchase any product. The price a retailer attributes to a commodity is primarily based on the quality and quantity of the item. Nevertheless, the business goals and aspirations of the retailer also come into play while finalising the cost of a product. The price includes not only the actual value of the product but also the profit the retailer wishes to attain by selling the particular item.
Though every retailer aims at amassing more significant profit, the primary aim of the Businessman should be to retain his business irrespective of the season, in case the retailer possesses long-term goals. If the retailer could preserve his business out of season, he might get an opportunity to attract more customers during the favourable tide. Every enterprise should embody a motive and target customers. Based on these factors, the retailers could organise their long-term business down the lane.
Both internal factors, which are intrinsic to the business and external factors, like customer demands, and market value, influence how an individual prices his product. Since internal factors consist of the components of the business, the retailer is equipped with the autonomy to manipulate and control the aspects mentioned above. These factors include capital, promotional strategy etc. External factors which include the competition, the financial capability of the consumers, and the trends prevalent in the market are not in the control of the retailers. Nevertheless, these factors should also be considered while pricing a product.
What Strategies can be employed while pricing a product?
Manufacturer Suggested Retail Price: Manufacturer Suggested Retail Price, which can be abbreviated as MSRP, is one of the significant elements that come into the pricing of a product. MSRP is employed to standardise the cost of a particular product. It also provides a universal value to a commodity to avoid pricing disparities. While deciding upon the MSRP, the demands of both the retailers and the consumers should be considered.
Keystone Pricing: This method obtains the retail price by doubling the manufacturing cost. This is easy to calculate since only a little intricate numerical data is involved. Nevertheless, not every product is valued; equally, a few commodities could garner more significant profit than the keystone pricing. Employing a universal yardstick for every product can bring losses for manufacturers and retailers.
Pricing a product is the most challenging task in the entire manufacturing process. The commodity’s price should be organised so that consumers and the producers would have no grievances. To lure consumers into purchasing a product, many retailers ascribe offers to their products. However, selling a product at a lower cost can backfire many times since the consumers who are habituated to buying a product at a lower rate would likely only buy the commodity at a higher price once the offer elapsed. Therefore, the retailer should be prudent while pricing a product.
