Pricing Strategy

Pricing Strategy


It may just be a herculean task to not only ascertain the best price to a product as to reaping the safe profit margin but to also gain a considerable percentage of the market share. It is highly risky to price a new product or service, or to even change the price of an existing one. On one hand, it may be too high with respect to demand of the product and profits end up never seeing the light of day. On the other hand, if it’s too low, it may illusionise a lack in quality.

To decide on the right price of a product or service, one needs to take a lot of factors into account . These include data from previous launches, competitive pricing, and discussions with buyers. One needs to truly understand what sensitivity means and how it could translate onto pricing. These are the tiny building blocks to come together and make the best pricing decision.

We at Autobei offer numerous approaches to arrive at the best pricing conclusion. Conjoint Analysis is one such technique that is employed mainly to absorb the balance between prices and the features the product has to offer. Assessing people’s need for the service and their priorities, one can strike that pristine balance between the product’s value to the customer and the cost incurred.

The Price Sensitivity Meter introduced in 1970 by Peter van Westendorp is used to decide the price of a product. It does so by asking four significant questions.
  • What price would you set the bar at, as being too expensive to buy?
  • What price would you set the bar at, as being too cheap to buy?
  • What price would you set the bar at, as being expensive but you would buy if found worthy of the price?
  • What price would you set the bar at as being a bargain?

Another type of pricing, commonly referred to as Concept Testing involves questioning customers as to whether they would buy that product at that price. The customers are asked in a random order. This is done to understand price elasticity and the balance between demand and cost.