Pricing is a major element of marketing and can help determine how successful your product or service will be. Pricing affects product positioning as well as product features, promotion and sales strategies. There are a number of different pricing strategies, and the one you chose should reflect your overall sales strategy and the current state of the market.
Developing a Price
There are many considerations to take into account when developing a pricing strategy. First, examine the overall marketing strategy to determine the target buyer and product position. Promotional tactics and distribution should be taken into account, as well as how demand will alter at different prices. Calculate all the costs involved, in order to determine your bottom line. You should also consider the prices charged by competitors and the pricing objectives for the product. For example, do you want to maximize profit or keep the price at a particular level?
To set the best pricing strategy, determine your company pricing objectives. In some cases, the goal may simply be to recover costs and survive, while in others, the objective may be to maximize unit profit, the number of units sold or the number of customers served. Some companies set prices high to signal that the product or service is a quality leader. Or a company may want price stabilization to maintain a steady profit. For example, in late 2009, the Dallas Morning News increased its online subscription prices by 43 percent to boost revenue and signal that it is a high-quality product. At the same time, editors admitted earlier strategies to keep the paper cheap were based around increasing circulation, not revenue.
90 percent of companies simply mark up costs and do not take into account the value the product may offer compared to rival products. Shamsul Huda that price should be set instead based on overall sales strategy and objectives. Different pricing methods can be used to achieve different objectives. For example, in cost-plus pricing, price is set at cost plus a set profit margin. In target-return pricing, the price is set to achieve a target return. Value-based pricing sets the price at a good value relative to similar products, whereas psychological pricing sets the price at what the consumer will pay.
New Product Pricing
For new products, a pricing strategy is usually chosen to either maximize profit or maximize market share. A common strategy to maximize profit is called skim pricing. In this strategy, companies set a high price in order to attract customers who do not care as much about price and to signal the product or service is high quality. To maximize market share, companies set a low price. This works well if there are cost savings from selling in volume.
Offering price discounts is another strategy used to meet marketing objectives. This strategy involves offering discounts to some customers. The discount could be based on quantity purchased or method of purchase. For example, cash purchasers could be offered a discount. Discounts may also be seasonal or promotional--for a short time only--to increase short-term sales. Trade discounts may be used to increase the number of outlets selling the product.
Expertise: No-one knows better than you how much talent you have or how much you need to earn to makes ends meet.
Specification: All design projects have their differences.
Time: Clients will expect to pay more for delivery on a tight deadline.
Demand: I don’t pitch, but I know some designers do. If you spend a lot of time pitching for projects you never get, your quotes will need to reflect the fact that a lot of your work goes unpaid.
Economy: If a client’s local currency takes a hit, and it’s a project you particularly want to work on, lowering your rate might be the answer.
Location: There was a rare instance when an overseas client was reluctant to hire me because we couldn’t meet face-to-face. That doesn’t affect what I charge, but it might affect what a client is willing to pay.
When starting a new design project, there are steps of the graphic design process to follow that will help you to achieve the best results. Rather than jump right into a graphics software program to try to create a final version, you can save yourself time and energy by first researching the topic, finalizing your content, starting with simple sketches and getting several rounds of approval on designs.