In a workshop in Asharqia Chamber.
The
trainer of the development of small and medium institutions from GIZ / Reem
Muhammed Al Suwail stressed the importance of a clear strategy for pricing
goods and services in institutions, especially small and medium ones, based on
demand, cost and competition.
"The
pricing is not a part of accounting, nor financial management, but a part of
the marketing mixture, which consists of the basic elements of the task of
helping the projects owners and marketers to make marketing decisions, and
determine the product and its price and specifications and location in the
market, and methods of sale and
the types of advertising used to get the best results in marketing on the
largest percentage of sales and the highest possible percentage of profits.
Al
Suwail said that the price is the value paid by the consumer to the seller of
the goods or services in exchange for them, which is one of the most important
factors on which the exchange between buyers and sellers is the decisive factor
on which the consumer decides on the basis of acceptance or rejection of the
product in most cases, This
is the only element within the marketing mix that generates revenue and affects
the sales amount of the organization.
Wronged pricing includes mistakes such as the lack of trust of
customers, suppliers and partners, which affects the value of the product or
service and perhaps the reputation of the project itself.
(Eg,
maximizing profit, maximizing return on investment and sales), and other sales
targets (increased sales or value or increased market share), and targets
related to the organization survival and maintaining its status.
She
noted that the pricing has a basis of several factors (demand level),
indicating that the relationship between price and demand is usually an inverse
relationship, in the sense that the low price leads to increased demand, while
increasing the price lead to lower demand. With
the stability of other factors related to the consumer, purchasing power,
desires, tastes and needs of consumers, as well as the stability of other
factors related to the structure of marketing mixture.
She mentioned that the pricing of goods and
services may be based on (cost) account, which all amounts borne by the product
to produce a particular commodity, including fixed costs that are permanently
either high or low such as incomes and salaries, advertising and publicity, the
main business of the project, and variable costs which
is reflected in increased sales such as raw materials, additional labor and
transfers. Which
are directly related to the volume of production based on these costs are
pricing.
She
added that pricing is also based on competition data and competitor price
analysis, which helps the entity to choose the right price that is able to
compete with the competing brands of the company commodity. Noting
that many enterprises are always trying to follow the prices of competing goods
and can be done directly and using the staff of their task to follow the prices
of competitors.
In
this regard, she said that the (pricing) strategy, which takes several forms,
including "pricing on the basis of flooding the market, which is called
the" abrasive price "where the company put high prices of their new
products offered to the market in order to get returns first go to cover costs,
The
product has unique characteristics that are not found in the products in the
market and are provided to consumers who are interested in getting the product,
even if the price is high. After sales start to decline, the company reduces
the price. This strategy succeeds if the quality of the product and its mental
image supports the price. So there is a
sufficient number of consumers want this product at this price, and that
competitors are not able to enter the market easily, while we find that some
companies take a mastery of market strategy (price sweeping), where some
companies put a low price for the market sweep quickly and deep,
for example, in order to attract the biggest number of consumers quickly and
gain significant market share, where low price leads to increased market share
and sales, which requires increased production amount to meet the demand, and therefor the cost per unit production goes
down because the fixed costs are spread over a larger number of Units, and even this strategy to succeed
it must be vulnerable to the market price, so low price leads to the increase
in quantities sold, to decrease the distribution and production costs due to
increased sales volume and low price helps to keep competitors out of the
market.
The
steps of products and services pricing (calculate the final price) as the use
of institutions and companies many of
ways and entrances in determining the prices of their products, and
major ways in determining the prices of goods in the project is the pricing on
the basis of (cost, or demand, or the conditions of competition in the market,
in addition to value
based pricing). Cost based pricing is one of the simplest and most widely used
pricing methods. The method is based on adding a percentage of profit to the
cost of the commodity in order to determine the selling price. This method is
appropriate for many industrial and service institutions, because it covers the costs and ensures the survival of the market,
and the advantages of this method as well as the simplicity and ease it is fair
to the seller and the buyer, especially since the stability of costs for a
period of time encourages decision makers to use, but this method to succeed
requires the determination of the actual cost The
amount of the commodity, and the amount of additional charges for each unit of
production, and how it is distributed to the different types of the produced
items.
Based on the value pricing, this method is used if the
goal was established or the main company is to earn a distinctive and loyal
customers and maintaining high quality regardless of the expected costs, so
that it is selling the product or service at a low price versus high quality,
this method depends on the strength and effect of the
benefits that can be provided to your customers, if you can clearly identify
the advantages offered from your competitors here you can determine your price
according to the value provided to customers, this method involves many
advantages, most prominently the possibility of the profit being very high by gaining distinguished and loyal customers,
but considering the high price, the targeted group is considered small, as there
is a high probability of having competitors
at lower prices.
