Pricing procedure
How pricing varies from one enterprise to another. Some companies are simply following the market price, so take into account only the influence of competition on pricing strategy choice, while other companies determine the cost of that product and according to it determine the price. Another factor that is taken into account in the pricing of a product is registered demand for the product. If two identical products, the consumer will choose the cheapest. The price imposed by the company is higher, the lower the chances that the product to be chosen by many consumers.
When determining the price level enterprise may be guided by cost, by request and after the competition:
"Targeting is the most basic cost calculation method assumes that price and the price to cover all costs and allow a profit;
'Targeting competition - competition plays an important role in determining the price and risk involved and dosage. If the company decides to raise the price of a product and the competition does not follow this trend, the product can be removed so outside market. On other hand, if you opt for a discount price and the competition is decided for a greater reduction in their products, you can get a true price war brings no profit to any party;
"Orientation after application - is less used, usually intervening when demand surpasses supply then the price is higher than that calculated according to the cost. Course, when the supply is greater than demand, the price will be reduced accordingly.
May be used in other methods of pricing:
"Income method - involves establishing a certain level of investment efficiency will be ensured by price;
"Perceived value method - based on the idea: a higher price for quality is adopted by manufacturers who see the perception of value by buyers based pricing.'s Used by businesses looking to create a certain image of their product will attract buyers willing to spend large sums of money to buy them;
"Value method - practiced by manufacturers that use a low price for a high quality offer.