Course: Why is a Pricing Strategy Important?

Course: Why is a Pricing Strategy Important? 

Pricing your product or service is a very important step for any business.

But beyond the obvious reasons like maintaining competitive pricing, why is it important?

 

Stick around and let’s find out! Deciding on the right price for your product or service will affect your sales and profit. Is offering the lowest price the solution? Not at all! What you need to do is set the right price that matches the value of your product.

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Pricing your product or service is a very important step for any business.

 

But beyond the obvious reasons like maintaining competitive pricing, why is it important?

 

Why is a pricing strategy important?

1

It will affect your sales and profit

2

It shapes your customer’s view on your product

3

It will help you grow your market share

4

All the above 1 / 7

Offering the lowest price for your product is the most effective pricing strategy

1

True

2

False 2 / 7

What makes a winning pricing strategy?

1

The cheaper, the better!

2

Consider all customers and don’t just focus on your target customers

3

The more expensive a product/service, the more likely it is that people will think it has value

4

Decide on a price that fits the market and fits the price of similar products to yours. 3 / 7

What is a cost-oriented pricing method?

1

Bases the price of the product on market trends

2

Accounts for the cost of production in determining the price of the product

3

Accounts for future events that may affect the price of the product

4

Matches the price of the product with the actual cost to produce it 4 / 7

What are the internal factors that influence your pricing strategy?

1

Price of supply

2

Organizational factors and Marketing

3

Competition

4

All of the above 5 / 7

What are the external factors that influence your pricing strategy?

1

Price of raw materials and Competition

2

Cost

3

Product differentiation

4

All of the above 6 / 7

What are examples of product differentiation?

1

Quality

2

Design

3

Packaging

4

All of the above 7 / 7 Error Occured Prev. Next

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In our last video, we defined a pricing strategy as the process of choosing a certain value for your goods or services.

 

Now, what Pricing Strategy is right for your business? There is no right answer to this: the right pricing strategy depends on your business’s needs.

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Setting a price for your product or service should not be only focused on profit but should also take into account several factors such as your brand, identity, and financial stability.

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Now that you know which pricing strategy is ideal for your product, it’s time to start planning away! 

 

Let’s look at the 3 steps you will need to follow to set up your pricing strategy

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What are the necessary steps that must be taken when building a pricing strategy?

 

And what are the different types of pricing strategies? Take this quiz and test your knowledge on these questions!

 

What is the first step in determining your pricing strategy?

1

Research the market and your competitors

2

Connect with your customers and see how they value your brand

3

Assess your business’s needs and goals

4

Decide on a random price and test it out 1 / 8

Which pricing strategy initially sets low prices for your products so that you grow your market share, then gradually increase them as your customer base grows?

1

Market penetration strategy

2

Economy pricing

3

Cost-plus pricing

4

Premium pricing 2 / 8

What is cost-plus pricing?

1

Giving higher prices because there is something unique about your product

2

Calculating your costs then adding a margin for profit

3

Setting a high price at the start and lowering it as you go forward.

4

Charging for your product based on your competition’s prices 3 / 8

Which pricing strategy is the reason you charge an odd number such as $19.97 for your product instead of a round number like $20.00?

1

Competitive Pricing

2

Economy pricing

3

Price skimming

4

Psychological pricing 4 / 8

What is the first step in setting up your pricing strategy?

1

Build your framework

2

Determine what your pricing will look like in the future by setting rules for your business

3

Assess where your business is in the market

4

None of the above 5 / 8

What should you do once you have set up your framework?

1

Start the reflection phase

2

Determine what your pricing will look like in the future by setting rules for your business

3

Share your knowledge and understandings with your team

4

All of the above 6 / 8

Popular streaming services like Netflix and Hulu offer similar prices for their services. What type of pricing strategy do is this?

1

Competitive pricing strategy

2

Economy Pricing

3

Price skimming

4

Psychological pricing 7 / 8

When the Dollar Shave Club first launched, it sold grooming razors at a lower price than competitors thanks to opting for a solely online presence, as well as cutting out “middlemen” wholesalers and distributors. What type of pricing strategy did the Dollar Shave Club use in this case?

1

Psychological pricing

2

Market penetration pricing

3

Cost-plus pricing

4

Economy pricing 8 / 8 Error Occured Prev. Next

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Lessons

01. Why is a Pricing Strategy Important?
02. What is a pricing strategy and why is it important?
03. How much do you know about pricing strategies?
04. Factors That Influence Your Pricing Strategy
05. How to Choose your Pricing Strategy
06. How to choose and set up your pricing strategy
07. The process of building a Pricing Strategy
08. Are you Ready to Build a Pricing Strategy?
Lessons

Lessons

01. Why is a Pricing Strategy Important?
02. What is a pricing strategy and why is it important?
03. How much do you know about pricing strategies?
04. Factors That Influence Your Pricing Strategy
05. How to Choose your Pricing Strategy
06. How to choose and set up your pricing strategy
07. The process of building a Pricing Strategy
08. Are you Ready to Build a Pricing Strategy?

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