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| Pricing Strategy | This section of the marketing plan determines how you will price your product or service. You can charge any price you want to, but there's a limit to how much the consumer is willing to pay. So your price has to be competitive but allow you to make a profit. Estimate how much it cost you to produce the product or service, make sure you include all your fixed and variable costs when you're calculating this; the cost of labour and materials are usual, but you may also need to include adminstrative costs, freight costs, selling costs, and other. Estimate the benefits to customers, compare to the similar products or services and then you can set your price.
Additionally explain how the price will help the business:
- to penetrate the market;
- to save and increase your market share in a highly competitive market place;
- to get a reasonable profit.
It is necessary to prove that your pricing strategy is right. The higher price can reduce sales but make a higher profit too. If your price is lower than competitors’ one, explain why are you able to do this? You can give the different reasons for it, for instance, great sales, high effective productivity, low value of labor and materials, low overhead. If it's higher, why would your customer be willing to pay more?
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