Pricing progression for profits

The price tag is the most important thing that comes along with a product. One of the most vital aspects that influences the buying decision of a customer is pricing, a well thought out procedure. 

The right price
The right price for a product is the one which a customer is willing to pay and is acceptable to a retailer for the goods he makes available to them. The right price ensures that the retailer gets his share of profit while the customer gets value for his money. But it is quite a task for a retailer to achieve such a state of equilibrium. The apt price is the one which would support a product's positioning and be consistent with the other variables in the marketing mix. The price of a product can be relatively high if aspects like manufacturing and distribution are of a relatively higher standard.

A retailer’s perspective
While setting a price for a product, the retailer has few key objectives in his mind pertaining to his business. His prime focus lies on the profits that he can generate from by selling a single article. The next concern will be the volume of sales he would be making determining the range of profits for him. The amount of customers walking in and the image of the store are also considerations he keeps in mind. Competitors and their price points also hold significance as this is what will determine the price which prevails in the market.

Considerations
The price for a product is set according to the policies of one-price, variable-price, odd-price, unit-price and price lining. Different products have the ability to command different prices at different times and at different locations. However, there are certain factors that play a pivotal role in such a case. Perishability, quality and uniqueness add to the value of a product. These are things a customer would definitely have in mind when making a purchase. 

Adjusting the retail price
Once the price is decided upon there are certain adjustments that are made to the price. Certain adjustments like discounts, mark ups and mark downs are common features. Discounts are reductions in the price of a product offered to employees and customers. Mark ups are taken after the initial price of a particular product is set. It is added on to the total cost incurred by the retailer to a product in order to create a profit. While on the other hand a mark down is just the opposite of a mark up. It is the downward adjustment in the price of a product. Permanent markdowns are created to remove a slow-selling item from the inventory.

Pricing mistakes
While pricing a product or a product range, the retailer can end up making a few mistakes. He should ensure that he keeps a track of a few important factors so as not end up setting an inappropriate price. Keeping a constant track of the competitors’ price policies, price inconsistencies the world over, maintaining a strong control on discounting etc.  

Pricing in a way is one of the most significant determinants of the success of your brand. Due considerations and efficiency in the process of pricing will help you pocket greater sales which will directly add up to your profits!