What is the important of Pricing in Marketing
Price is one of the element of marketing mix, because it is the only element in marketing that create revenue other are costs. price is an integral part of marketing management .
Price in marketing is generally proposed by seller and the buyer then decide whether to accept it . It does not become a price until it is propose by one and accepted by the other.
However, the important of price can be viewed from two different angles, namely, its importance within the economy and its importance to the individual company.
Many people consider pricing to be the key activity within the free enterprise system of economy in that the market price of a product affect such things as profit, wages,interest,rent etc.
In other words, the price of a product has influence on the price paid for other factors of production. We can therefore conclude that price is a basic regulator of the free enterprise system of economy.
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Price also assume further importance within an economy during a period of inflation in that it affects the buyer behavior, as well as the consumer confidence in the economy.
Pricing have on your business is an increase or decrease in sales volume. Economists study price elasticity, or the response of consumer purchasing to a price change. Increasing your prices might lower your sales volume only slightly, helping you make up for decreased volume with higher total profits generated by higher margins.
Lowering your prices can increase your profits if your sales jump significantly, decreasing your overhead expense per unit. Test the market’s response to price increases by changing prices in targeted areas before instituting an across-the-board price increase.
A 5% improvement in pricing without volume loss and average margins can boost profits easily by 30% to 50%. You may already have a cost-cutting strategy in place in order to boost profits.
Important of pricing
- Pricing determines the market standard. The decrease the expenses in the economy, the better is the purchasing energy inside the palms of customers. Price displays purchasing power of the market.
2. Price in mixture with promotion will become a strong tool for influencing buyers to buy products. It pastimes the shoppers and highlights the photo of the brand to growth sales. maximum time business owners consciousness on other advertising mix elements by preserving the charge constant based on recovering costs at certain percentage.
3. To fight towards competition in unfastened economic system gadget Price is layout as a weapon
4. increasing and decreasing price can lead customers to be conditioned to assume fee reductions and, consequently, withhold purchase till the fee reduction happens once more.
5 .Additionally, the price you put affects your earnings margin in keeping with unit sold, with higher expenses supplying you with a better income per item if you don’t lose income. However, higher charges that lead to decrease income volumes can decrease, or wipe out, your profits, because your overhead expenses in step with unit boom as you promote fewer units.
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6 To sum up, the price you put makes you greater or less competitive inside the marketplace, affecting your share of the marketplace’s volume. Some groups lower prices temporarily to gain market proportion from competitors, who can’t respond to and meet a rate decrease. After customers have had time to attempt your product and increase a logo preference or loyalty, you may boost your fees once more to a degree that won’t purpose them to go away you.