Pricing Strategy Essay

To set a charges strategy, there are number of steps taken into account as follows: Step 1 : Our pricing objectives should be maximize business and enhance sales amount. This strategy will be used when TrackR is being introduced into the industry. We charge a reasonable value in order for TrackR to be available in the market immediately and also to inspire the interest and excitement of the product.

As a result of low price, we can easily raise the product sales volume conveniently, maximize the market share and reach the economic of scale as quickly as possible. In order to boost the sales more, we will offer you promotion then the product start, which will afterwards be discussed in the afterwards section. At some point, we can enter the market and create brand awareness. Step two: Being a monopoly of TrackR, we have a sole power of controlling value and quantity, but before we all set a final price, we should observe the demand. TrackRcan always be classified because normal products for certain groups of persons.

While the cost remains the same, people tend to buy more normal merchandise when their particular income raises and they less likely to buy regular goods when their income falls. TrackR is cost elastic meaning consumers are responsive/ sensitive into a change in selling price. If we choose to elevate the buying price of TrackR, the quantity demand will be declined.

Step three: We must also estimate the costs associated with TrackR. All costs can be split up into a couple of categories; fixed costs and variable costs. Fixed costs include salary, rent, PAGE RANK and promotion and sales promotion, that can come down to several million baht per month while the variable costs comprise of unit cost, delivery fee and exchange charge which are 375 baht per unit.

Step four: Analyzing competitors’ costs, prices, and offerings. Our competitors can potentially become online retailers, for instance , eBay or perhaps Find my iPhone. Step 5: We divide our buyers into two segments; B2B and B2C so all of us will use several strategies to several potential buyers. Intended for B2B purchasers, we is going to sign a contract and sell them on the large volume at an acceptable price range about the numbers of product purchased.

With cost advantages over competition as you can see around the previous glide, we are able to build-up a buffer protecting all of us from new entrants getting into the market. However, as we make an effort to achieve our objective of accelerating the revenue volume, we all set a price you can afford making it accessible to B2C consumers thus we can raise the sales volume level and eventually attain economic of scale. We begin employing value structured pricing approach for the two purchasers, which units prices mainly upon the worth perceived/estimated by the consumers as opposed to the costs with the product.

In other words, value primarily based pricing is known as a valuation great or service according to how much consumers are willing to pay. We have done an industry survey to determine at what amount consumers would like to spend. It can be somewhat arbitrary but it greatly assistances within an effective promoting of merchandise in understanding effects of good or service has on consumers. We all then make use of break-even research, which presents a point where total expense and total revenue will be equal: there is not any loss or gain at this time. It intentionally uses to look for the minimum result that must be reached in order to make a profit.

It is a rough indicator of any marketing activity and also gives a dynamic view of human relationships between costs, sales and profits. All of us also use amount discount intended for B2B buyer, which is an incentive offered to the potential customers resulting in a reduced cost per product of goods once acquired within a greater quantity. A quantity low cost will be proposed to lure our customers to purchase in larger volumes.

Step 6: Today, we have drop to a bottom line of TrackR’s final price. Allow me to share the base rates for both B2B and B2C buyers.