� 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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