Solved by: AllAcademicHelp.com
The price you charge for your product or service is one of the most important business decisions you make.
Pricing can make or break a small business. Setting a price that is too high or too low will – at best – limit your business growth. No matter what type of product is sold, the price that was charged to the customers, it will have a direct effect on the success of your business. Pricing strategies are complex. According to Scrimgeour, (2016), lower prices are a temptation doe most of the small businesses but it rarely a good move, and the customers will work out to bargain and would wait for the prices to reduce and that is when the business will see much lower sales in terms of cash. All prices must cover costs and profits. The most effective way to lower prices is to lower costs. Review prices frequently to assure that they reflect the dynamics of cost, market demand, response to the competition, and profit objectives. Most of the businesses during recession think that it is best to lower the prices in order to keep the existing customers and increase sales. According to Entrepreneurshipinabox.com, (2018), some of the hidden effects of lowering prices is that, when the prices are cut, it immediately decreases the reputation as the customers will doubt about the quality of the products that they would get, another possibility is that there will not be many new customers because the prices are the same and can also lose a portion of existing customers. In order to make same profits, sale must be increased 100%. Prices must be established to assure sales. Before setting a price for your product, business must know the costs of running the business. If the price for your product or service doesn’t cover costs, your cash flow will be cumulatively negative, you’ll exhaust your financial resources, and your business will ultimately fail. It is necessary to know the prices established by each of the competitors and then set a optimum price based on the comparison. If the business decides to charge higher prices, it need to make sure to provide superior customer service and warranty policy. Improve profitability through regular pricing reviews. When setting the prices, it is important to ensure that the price and sales levels that are set will allow the business to be profitable.
Scrimgeour.H, (2016). The price is right. How much should you charge for your product or
service?. Retrieved from https://www.theguardian.com/small-business-network/2016/may/31/pricing-strategy-small-business-charge-product-service
Entrepreneurshipinabox.com, (2018). Why lowering prices is a bad strategy for your small
business. Retrieved from https://www.entrepreneurshipinabox.com/342/lowering-prices-bad-strategy/
The post The price you charge for your product or service is one of the most important business decisions you make appeared first on Essay Writing.
READY TO PLACE AN ORDER