PRICING ANALYSIS
Pricing is a very complicated yet exceedingly important matter for the organization to consider. Minor changes in pricing can have an exceedingly high impact on sales. There is much more to consider with pricing than simply covering manufacturing costs and applying a reasonable markup. Factors such as the nature of the item, the customer, demand, strategy, and competition must be addressed.
BENEFITS OF A PRICING ANALYSIS
Performing a pricing analysis on your firm's entire product line will help ensure that your company is getting the most out of its sales in light of its objectives.
THE PRICING ANALYSIS PROCESS
- Determine the item(s) to be analyzed
- Review available costing data to ensure that pricing is appropriate
- Review pricing alternatives in light of the item's qualitative factors
- If it is determined that changes must be made, develop a plan for implementation
FURTHER READING
These links elaborate on the topic at hand. They serve as a good starting point for those companies that would like to learn more or would like to address these topics “in house.” For those firms that prefer to continue to focus on their current responsibilities and would value the objective viewpoint of a professional from outside of the organization, click here.
Pricing New Products, Pricing Article – Inc. Article
Excerpt: “Companies consistently undercharge for products despite spending millions or even billions of dollars to develop or acquire them. It is true that businesses and private consumers alike are demanding more for less; the prices of personal computers, for example…”
http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-2499/T-6111web.pdf
Excerpt: “From an economic view, the right price maximizes the owner’s profit. Often business owners set prices that maximize sales or maximize customers. At times they set prices that do not even cover costs. This can only guarantee business failure.”
ImperoCo Business Solutions - "Developing Organizational Success."