Pricing strategies and their types

Currently, there are various price strategies. The choice and development of a specific pricing policy has a huge impact on the future activities of any enterprise. After all, the calculation of the price for the sale of products depends on the amount of profit received, given the available costs for its production.

In the most general form, the following pricing strategies can be distinguished:

• High prices.
• Average prices.
• Low prices.

The first type is designed for a fairly narrow consumer audience, since not all citizens are ready to part with a large sum of money in order to purchase a new product. However, such manufacturers, as a rule, guarantee high quality of the product. Thus, the price level is justified by a high-quality raw materials base. This strategy proves to be most effective if there is no serious competition in the selected market segment. On the one hand, an entrepreneur runs the risk of producing a unique product designed for well-off consumers. On the other hand, he gets the opportunity to independently determine the price, that is, acquires monopoly power in this area.

Of course, this state of affairs will not continue indefinitely, because sooner or later competitors will appear, then we will have to consider other types of price strategies. Until then, the main task of the manufacturer is to receive, as much as possible, profits.

The average price strategy is used by most enterprises and organizations, as it is suitable for all stages of the production process. It is based on the maximization of income, but is designed for a long-term perspective. That is, the entrepreneur should not expect a momentary effect, as sales will increase gradually. These pricing strategies are popular because of the reduced risk of unclaimed goods because of its high price. In this case, you can expect an average level of profit of 8-10% of the charter capital.

If an entrepreneur is guided by low prices, then he adheres to the strategy of a price breakthrough. As you know, reducing the cost of goods guarantees an increase in demand for it. Many enterprises on the verge of bankruptcy, thanks to low prices, expand the audience of consumers, which contributes to the increase in profits.

In addition, depending on the industry, from the market segment, the economic situation and other factors, it is possible to identify other marketing strategies . Kinds of them are guided by existing problems and the basic purposes which it is necessary to reach. For example, the method of differentiating prices by various factors is very popular all over the world. Producers periodically increase their sales through seasonal discounts or through special promotions that offer the consumer group to buy goods at a larger volume at a lower price.

The government actively supports such price strategies as the introduction of preferential and stable prices. Often, the preferential price reaches a level much lower than the cost, which allows a sharp increase in sales in the shortest possible time. State bodies also regulate pricing in the production of essential goods. Such enterprises adhere to the policy of stable prices, counting on the regular receipt of profits in the long term.