Pricing Objectives: Organizing The Entire Pricing Process

What are the pricing objectives of organization?

Pricing objectives could be referred to the objective that drives how the organization sets prices for its product or service. These objectives could and should apply to pricing for both new as well as existing customers. The guidance offered by pricing objectives is exceptionally critical to adjust prices over time in order to address and meet the objectives. Every pricing objective requires a different pricing strategy in order to meet goals of business. Hence, specific pricing methods work well for addressing a certain objective of organization, while other integrations might contradict one another. Therefore, it is significantly imperative to ensure the pricing objectives and strategies are closely cohesive. Turning a profit is prime and most common pricing objective for every organizational business.

Following are few examples of pricing goals and objectives:

• Maximizing the short term and long-term profit
• Maximizing the sustainability of business in the long term
• Penetrating new and raw markets
• Increasing the overall sales management volume
• Stealing market share from direct and indirect competitors
• Generating interests across new products
• Surviving an eventual or gradual frequency of business

What are the 4 types of pricing objectives?

The four types of pricing objectives include profit oriented pricing, competitor based pricing, market penetration as well as skimming.

Profit-Oriented Pricing: This type of pricing objective can either aim to accelerate profit per unit relative to the entire cost of goods sold along with the other operating costs, or it might also aim to enhance the overall profitability of business by benchmarking a particular price that is more and sufficiently competitive to improve the number of associated units within the organization.

Competitor Based Pricing: pricing based on Competitors utilizes the price organization set for appealing to the existing customers and accordingly defining the niche relative towards the current competitors. Hence, this method do not primarily rely on establishing a lower price than other available alternatives, even though this pricing strategy certainly makes the products more  appealing to customers shopping based on price.

Market Penetration Pricing: A pricing strategy based on market penetration is accelerated towards obtaining a foothold within a competitive market, generally by providing an initial price that is relatively low. If any individual starts out by attracting customers based on price, organization could avail more customer to try the new products, and accordingly start developing a reputation along with a clientele that allows the organization to gradually charge more.

Skimming Pricing Strategy: A pricing strategy based on skimming utilizes the alternative rational from the one that is based on market penetration. This is because, skimming pricing strategy uses a reputation that has already been established or developed in order to charge extra prices from early adopters. If the customers are exceptionally passionate about the products and are willing to pay extra to be the first to have them, then organization could accordingly charge high prices initially while making a new innovation, and then reduce the prices once the organization  is successful in attracting the people (specifically who are okay and willing to pay more).

What is pricing explain the objectives of pricing?

Pricing in simple terms could be referred as the process of fixing the overall value that an organization will obtain in the exchange of its products and services. Therefore, pricing method is also responsible for adjusting the total cost of the offerings made by producers that is appropriate to both the organization along with the customer. Therefore, in other words, pricing objective or method is a specific technique that an organization applies to handle the cost of its products. Hence, pricing process is the most complex process for an organization, as the price must match the current structure of the market and must also compliment the overall expenses of the organization along with its gain profits. In addition to this, the organization requires to take the product pricing of the competitor’s into consideration. Therefore, choosing the correct or suitable pricing method is crucial and imperative. While setting the cost of any product or services the following points must be considered:

• identity of the introduced goods and services
• overall cost of relative goods and services within the business market
• The target audience for whom the goods and services are produces
• The total cost of production (including raw material, labour cost, machinery cost, transit, inventory cost and others.).
• External factors such as rules and regulations, policies of the operating government, and economy

What are the 3 objectives of pricing?

The prime objectives of pricing include:

: (i) attaining a Target Return on Investments (ii) Stability in Price (iii) attaining a better Market Share

• Attaining a Target Return on Investments: This is the most critical objective which every concerned organization wants to attain. The prime objective is to attain a specific rate of return on its made investments and accordingly develop a frame for the pricing policy to attain that set rate. For instance, the concern might have a desired target of 20 percent return on investment and 10 percent return on investments after taxes. These targets might be short term (usually for a year) or for long term.
• Stability of Price: This is another critical objective of an organization. This is because the Stability of prices over a defined period demonstrates to the overall effectiveness of an organization. However, on account of altering costs from time to time, stability of price could be achieved. In the business environment where there are less organziations, organizations seller wants to maintain consistency and stability in its product’s prices.
• Attaining a better Market Share: Market share could be referred to the overall share of the organization in the total sales of the product within the business market. Few of the major organizations when introduces its product within the competitive market, they wish to attain a specific share of the market in the initial phases of business operation. In the long run of the operation, setting proper pricing stragies might help organziations in achieving a great share or portion of the business market (primarily by selling its products at relatively lower prices).

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