Pricing Strategies

Now that you have a brief understanding of Marketing, lets take a look at how to price your product. There is a lots more to pricing that what I am going to tell you but this should give you some idea of what your price should be.

Pricing is not as simple as covering your costs and adding a mark up percentage. There is a reason why a Ferrari is more expensive than a Toyota, even though the cost of making them will be similar. Yes I know the Ferrari is more expensive to make be not that much more.

The first strategy you can use is to consider what your competition are priced as and be the same as them. You will find this a lot in magazines. Go look at all the Car magazines and see how the price is almost the same.

The second strategy you can use is call penetration. This means you price your product lower than your competition so as the take market share quickly. This sounds like a good strategy but as I said earlier there is a lot more to pricing than what I am saying. Using this strategy can give you a negative image and you could be considered cheap. Game does this strategy extremely well.

The third strategy is called Skimming. This is the direct opposite of penetration. This is when you price your product at a higher price than your competition. This strategy will look like you have a superior product to your competition. It will also take longer for you to gain market share and you will be considered an exclusive brand. Apple Computers use this strategy brilliantly.

Always remember that the customer must always be the center of all your strategies.

Please be very careful when choosing a pricing strategy. I do not recommend you go ahead without consulting with a professional regarding your pricing.

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