� Pricing
Choosing a pricing strategy is a very important next step . This is relevant to pricing the membership fee ( where relevant ) as well as the prices for any products or packages sold . Here are the common pricing strategies to help the participants select the one that is most suitable for their social start up .
Pricing Strategy
Cost plus Pricing
Penetration Pricing
Target Profit Pricing
Description
Setting a price by adding a fixed amount or percentage to the cost of making the product or service .
Setting a very low price to gain as many sales as possible . Although this may not cover the costs , it can help to obtain a significant market share .
A specific profit is required and the product priced accordingly using the following equation : Target profit price = Fixed Costs + Target Profit + Variable Costs per Unit , divided by Sales Volumes in Units .
Price Skimming Setting a high price before other competitors come into the market .
Predatory Pricing
Competitor Pricing
Price Discrimination
Setting a very low price to knock out all other competition .
Setting a price similar to competitors ‟ existing prices .
Setting different prices for the same good , but to different markets e . g . peak and off peak mobile phone calls to stimulate demand .
Give the participants time to discuss the various pricing strategies , and then insert here the pricing strategy they agree upon :
Now give the participants time to work with a few pricing scenarios . Ideally , they will need to identify a range of possible prices to reflect :
1 . Best case scenario 2 . Average case scenario 3 . Worst case scenario
All 3 scenarios however must account for the breakeven point
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