The purpose of setting the selling price
The purpose of setting the selling price. In setting price objectives, producers must link it with the overall company strategy. As for the general purpose of pricing is.
1. Maximizing sales and market penetration
To be able to attract the attention of consumers who are the target market, a company should set the lowest possible price. With prices dropping, it will trigger an increase in demand which also comes from competitors’ market share.
2. Maintain service quality or differentiation
If the competition within the same business industry is quite a lot and strong, one technique that can be used to maintain consumer market share is to adjust prices to make them cheaper. With a lower price reduction than competitors will make consumers remain loyal to the products we sell.
3. Obtain or maximize profits
Pricing usually takes into account the level of profit to be obtained. The greater the profit margin you want to get, the higher the price set for consumers. In setting the price, it is better to take into account purchasing power and other variables that are affected by the price so that the profit achieved can be maximized.
4. Market price
Obtain or Seize Market Share / Market Share
5. Maintaining the Continuity of Operational Activities.
A good company sets prices by taking into account all possibilities in order to continue to have sufficient funds to continue carrying out the business activities being carried out.
6. Return on Capital ROI / Return On Investment.
Every business wants a high rate of return on investment. High ROI can be achieved by increasing profit margins and increasing sales figures.