For your services or your products, you need to determine the right price depending on your market, the quality of your service or your offer, competition in your market...
How to calculate the selling price?
The formula is simple: selling price HT = cost + mark-HT
The establishment of the sale price does not happen randomly or by equivalence of prices by the competition: a selling price must also take into account the economic constraints of the company to provide a product or service on the market. All of these elements is the financial cost.
What is the cost?
These are fixed and variable costs of the company that enter into the constitution of a unit of product or service delivery. The cost is the sum of the following:
This calculation is also applicable to service businesses. Indeed, the provision of services involves economic constraints and procurement for the provision of the service, to be taken into account to determine a selling price. Expenses to consider include:
Why stay alert to the sales margin?
The trade margin is the value provided by the company at cost of the product or service. His mastery is vital to ensure the profitability of your business, to improve it and register your business in an economic performance approach.
If the sales margin helps to determine the selling price, it also avoids the loss selling situations.
This brought surplus value is also:
There is no ideal margin! According industries practices can be very different. The right margin is one that allows you to sell your products well and to ensure the continuity of your business.
The company can improve its gross margin by:
Price is one of the most important elements of the marketing mix, as is the mix only, which generates revenue for the organization. The remaining 3p are the variable cost of the organization. It costs to produce and design a product; it costs to deliver a product and the costs to promote it. Price must support these elements of the mix. Pricing is difficult and must take into account the supply and demand relationship. Price of too high or too low product may result in loss of revenue for the organization. The pricing must consider the following factors:
Types of pricing strategies
An organization can adopt a number of pricing strategies. Pricing strategies are largely based on what the company has set goals to achieve.
Penetration pricing: Where the organization sets a low price to increase sales and market share.
Skimming pricing: The organization sets a high initial price, and then slowly lowers the price to make the product accessible to a wider market. The aim is to cover the profits of the market layer by layer.
Competition Pricing: setting a price in comparison with competitors.
Price line products: the prices of different products in the same product at different prices. An example would be a manufacturer offering different VCRs video with different features at different prices. The more features and advantages achieved over the consumer will pay. This form of price discrimination assists the company to maximize revenues and profits.
Bundle Price: Beams of organizing a group of products at a reduced price.
Psychological Price: Seller here considers the psychology of prices and price positioning in the market. The seller will be charged 99c instead of 1$ or $ 199 instead of $ 200
Premium Price: the high prices are meant to reflect the exclusivity of the product. An example of products using this strategy would be Harrods, first class airline services etc. Porsche
Price option: The organization sells options with the product to maximize its revenues. This strategy is commonly used in the automotive industry.
In conclusion, choosing the right pricing strategy is important for a Freight service. The right pricing strategy will be attractive to customers and increase revenues, but the wrong strategy may turn off customers and decrease sales. Listed before the pricing strategies commonly used in business: premium prices, prices of the economy, skimming, psychological price, line price of the product, the price of captive products, bundle, promotional pricing, geographical pricing and price value . Any strategy you choose will likely have advantages and disadvantages.
Tips & Warnings
Concentrate on the strategy in which most pros outweigh the cons. This does not mean choosing the strategy with the most benefits and least disadvantages, but considering the qualitative impact of each pro and con.