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As soon as companies think about launching their new projects, supported by distinctive products and a brand that attracts customers and consumers, a dilemma arises facing the product that the company wants to put on the market, which is related to the price of the product compared to other products in the market and on the shelves of sales outlets.
The product pricing process is one of the most important steps in launching any new product or service. As this step baffles the management greatly, until it reaches a price that achieves a balance between achieving the appropriate gain, and preserving the best opportunities for competition in the market, according to marketing expert, Muhammad Abu Al-Qumbuz.
Abu Al-Qumbuz defines the product pricing process as determining the amount that the company gets from selling a service or product. The price is one of the main components of the marketing mix, along with the product, place, and promotion. It is that the price entails obtaining revenues, while the other components need to pay costs, to complete well, and accordingly, product pricing is of great importance to every facility. Abu Al-Qumbuz explained that when setting up a pricing model for its product or service, the company’s management must set before it a set of goals that control the determination of prices, according to its vision, the most prominent of which are: continuity in the markets, increasing the profit margin, controlling the market, new ideas imposed new prices.
Muhammad Abu Al-Qumbuz
continuity in the market
Finding an appropriate price for the product or service offered to consumers will make them close to the product and stick to it, and the price should not be at the expense of quality, and in this way the product will remain for as long as possible in the local and regional markets, and prove its existence strongly, and then the pricing process can be reconsidered. , after he has established a large consumer base for him.
Increase profit margin
Today, companies are certainly looking to increase their profit margins, in light of rising prices and global economic problems, but the company must know and study the supply and demand situation in the market, and the quality of competition.
Market control
Sometimes, when entering the market, companies resort to setting a low price for their product or the service they provide, with the aim of controlling the market and achieving the largest possible amount of sales after increasing the demand for the product, which ultimately leads to a decrease in the cost of production in the company.
New ideas have high prices
Some companies, especially those working in electronic and portable devices, attribute the high prices of some of their products and services to the quality of their product, due to the high cost of production, to provide all these advantages in one product, which is not available to competitors.
Product pricing
When thinking about determining the price of a product or service, the price must be subject to a number of criteria and conditions that govern it, so that it does not find it difficult to enter the market through the big door, and also so that it does not stagger or fall after it is put on the market. Among the most important criteria that must be taken into account in determining product prices are production costs, the profit margin that the company is looking for, and who is the target audience? Who are his competitors?
We advise companies and institutions to follow these standards, in order to price the products they offer correctly, and in order to achieve their economic goals for which they entered the market.
production costs
In order for the company to be able to reap profits, its sales must cover the costs incurred, so that it can provide the product or service to the public. The costs are divided into three types: raw materials involved in manufacturing, manpower, and general expenses. Raw materials are represented by all the elements and raw materials that go into the manufacturing process, and the workforce is employees and workers, with different tasks, including salaries, insurances, payroll taxes, and other expenses that the company pays to its employees. General expenses include all expenses paid by the company on a monthly basis, regardless of the volume of its sales, such as rents, costs of using equipment, insurance, taxes, shipping costs, marketing of products, and others.
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Profit margin
After determining the costs of the product or service, we move on to the profit margin that the company seeks to achieve from selling its services or products. The method for determining this margin differs from one department to another.
Knowing customer characteristics
Studying and knowing the characteristics of customers is one of the most important strategic axes on which the company must build itself, in order to determine and know what consumers demand, and what will distinguish the product or service that it will provide? How will it differ from its competitors?
It is necessary to identify the demographic characteristics of consumers, such as age and gender, as well as the economic and social level, and whether your product or service is a priority for them, or a secondary thing.
Monitoring and controlling prices
The process of monitoring prices, especially the prices of competitors, must remain continuous, to know the changes that may affect their products, and also to know the orientation of your customers after a period of launching the product or service, in order to solve problems and obstacles and adjust what is required, so that the price remains within the reach of the category You selected to purchase your product or service.
In addition to controlling prices, the specialist in the company must monitor the costs of manufacturing the product, and ensure that they do not significantly increase over the previously specified level, and also monitor the general impression of the product, whether it is negative or positive; Because all these matters may sometimes require intervention, re-evaluation and change of prices, based on these impressions.
Competitor analysis
It is necessary for the company, at the beginning, to know what are the things that attract customers in the product or service provided to them? Or what is not found in other products? And they search for it in your product, when the establishment can accurately identify the characteristics of consumers, you will be able to identify direct competitors more easily, and at this time it must
