When you have to devise or evaluate a price strategy in a competitive market, there is more than one consideration you have to take into account. Typically, there is no straightforward answer as to “when” you should change your pricing.
New Age of Strategic Pricing
At its core, you have to understand the process and devise a well-thought-out price strategy. For instance, you can opt for a cost-plus pricing strategy as a direct way to figure out the most suitable price. On the other hand, you can adopt a value-based pricing strategy by combining your external and internal data. The trick is to analyze the preference, needs, and buying power of the customers.
Total Cost of Ownership
Different enterprises use different methodologies to calculate the total cost of ownership. In most cases, it is hard to pinpoint all the involved operating costs for any manufacturing equipment. Furthermore, TCO analysis cannot predict unpredictable and increasing costs over a long period.
It is fundamental to understand that market pricing impacts everything. Whether it’s the market reputation or profit margin, pricing has a cause-and-effect relationship. So, it makes sense to pay close attention to “how” you intend to roll out new price adjustments.
In retrospect, market pricing is a continuous process that changes over time. Often, competitive market pricing can turn into a nightmare for businesses, and often there is no guarantee as to how customers would react to a different price strategy. In essence, unplanned and unexpected market pricing changes can affect your bottom line.