Determine pricing objectives
One objective of pricing is to make a profit on your products or services, but there are many other pricing objectives that can affect your pricing decisions including:
- Sales and finance targets.
- Profit and/or cash flow targets. When setting your prices with this objective in mind, establish your targets early and try and find pricing strategies that will help you meet them.
- How your products and services are positioned in the market place compared to your competitors.
Positioning can help you establish your products or services in the market, for example, your business might sell high-end products, try to compete on price, or get into the budget level market. Price can indicate a level of quality so it's important that the price of your products or services complement your overall brand.
For many businesses, being price-competitive is important, whether as a price leader or responding to the competition. When setting prices with this key objective in mind, it's always important to pre-empt what your competition will do in response to your prices and ensure that you factor it into your strategy.
Using price to increase demand in new or existing products or services can be a good objective for establishing customers or boosting lagging sales. When multiple products or services are involved, it's a good idea to be aware of how the prices complement each other.
See our Pricing strategies page to find the best strategy to help you increase demand. It's important to always keep your main business and marketing objectives in mind when developing your pricing objectives, to ensure they are complementary to one another.
What to do...
- Download our Marketing plan template and guide.
- See our Pricing strategies page to find the best strategy for your business.
- Go to our Events search for seminars on marketing and pricing near you.
- Use our free Advisory Services search to find a free or low-cost business adviser near you.
- Consult an experienced business adviser, accountant or solicitor.