Methods of pricing in marketing

Every time we come to the store and see the price change, it becomes interesting to us on what basis these prices have changed, and in general, who is responsible for their formation. Particularly striking when the same simple product from different manufacturers varies in price several times, or when in the neighboring shops the same goods stand differently. Do not rush to blame the government for everything - the pricing process is somewhat more complicated than it seems at first glance.

If you think that in conditions of free market pricing, prices can be composed according to the mood, then you are deeply mistaken. It is, of course, possible, but such a company on the market will not last long. Having looked at the main methods of pricing in marketing, you yourself will understand how difficult and complicated this process is.

First of all, the company should be guided by competitors and the average market price when setting the price. If this is not done, the company will either not be able to sell its product (inflated price) or incur losses (understated price). However, to navigate is not to copy. In fact, the company must evaluate the strengths of its products, the strengths of the competitor's goods, then weigh their importance in the eyes of the consumer, and finally determine the optimal economic value of the product.

If these methods of pricing in marketing seem complicated to you, imagine that the company evaluates which product to the consumer seems to be the best - her or the competitor. If her - then she can sell it more, if not - then vice versa. However, it does not mean that it should. Based on the calculated economic value, the company forms a price that can differ from it. Here there is an element of the game: someone, understating the price, wants to win market share, and someone, overestimating it, seeks to convert the product into an elite category.

The strategy is quite logical, but not entirely linked to profit, and in fact profit is the determining factor for the company. Previously, the main pricing methods Directly depended on profit, tk. The price was calculated as costs plus the company's expected profit. However, today, in a highly competitive environment, the company can not tie the price to profit, since it risks losing a lot, so it has to proceed from the price, reducing costs to increase profits.

There are, however, other ways of determining prices, other than calculating the expected profit and analyzing the average market price. They are used less often and, usually, under special conditions. For example, methods of pricing in construction, where the buyer is often determined by means of a tender, include, so-called, the "sealed envelope" method. In this case, the company does not know what price the competitor will offer, and is forced to guess the offers of competitors in order to win the tender and secure an acceptable profit.

Sometimes there are also such rare methods of pricing in marketing, As the establishment of prices under the influence of the state, the establishment of a deliberately low price, in order to ruin a competitor, establish a common price for all enterprises, in conditions of absolute competition, etc. However, the highest value in the formation of prices has, nevertheless, the subjective attitude of the consumer to a particular product.

This approach to the concept of "price" makes prices in many cases extremely unfair: "bloated" advertising or based on the incompetence of the buyer. However, as long as there is a modern economic system, the above methods of pricing in marketing will be used, which means that we can not count on any justice in this matter.