In collaboration with the accounting and finance department you and the marketin

Question

In collaboration with the accounting and finance department you and the marketing team are to develop a competitive pricing strategy that will make your product or service move ahead of the competition. Based on what you have learned thus far in the course, what are some of the major factors that should be taken into consideration when developing a pricing strategy for your company? Present your discussion in a way that it will thoroughly convince the executive committee that your pricing strategy is in the best interest of the organization’s profitability. Thoroughly explain.

Explanation / Answer

Factor consider while preparing Pricing strategy is mention below:

1. Your Costs

First of all determine the cost of product or service provide and determine the breakeven point of the sale. It is also necessary to consider taxes while analyzing the cost of the product.

2. Your Profit

Somewhat related to your costs, you should always consider how much money you are trying to make above breaking even. This is business after all.

3. Market Demand

If what you do is in high demand, then you should be aiming to make your services more expensive. Conversely if there's hardly any work around, you'll need to cheapen up if you hope to compete.

4. Industry Standards

It's hard to know what others are charging, but try asking around. Find out what larger businesses charge as well as other freelancers. The more you know about what others are charging and what services they provide for the money, the better you'll know how you fit in to the market.

5. Skill level

Not every freelancer delivers the same goods and one would expect to pay accordingly. When I was a freelancing newbie I charged a rate of $25 an hour for my design, when I stopped freelancing recently my rate was $125 an hour. Same person, but at different times I had a different skill level and hence was producing a different result. Whatever your rate, expect it to be commensurate with your skill.

6. Experience

Although often bundled with skill, experience is a different factor altogether. You may have two very talented photographers, but one with more experience might have better client skills, be able to foresee problems (and thus save the client time and money), and intuitively know what's going to work for a certain audience and so on. Experience should affect how much you charge.

7. Your Business Strategy

Your strategy or your angle will make a huge difference to how you price yourself. Think about the difference between Revlon and Chanel, the two could make the same perfume but you would never expect to pay the same for both.

8. Your Service

What you provide for your clients will also make a big difference to your price tag. For example you might be a freelancer who will do whatever it takes to get a job just right, or perhaps you are on call 24-7, or perhaps you provide the minimum amount of communication to cut costs. Whatever the case, adjusting your pricing to the type and level of service you provide is a must.

9. Who is Your Client

Your price will often vary for different clients. This happens for a few reasons. Some clients require more effort, some are riskier, some are repeat clients, some have jobs you are dying to do, some you wouldn't want to go near with a stick. You should vary your price to account for these sorts of factors.

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