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How to Price Technology?

Companies that have succeeded in marketing believe that the final stage of the transformation in the marketing mix, which can change the conditions for you, is product pricing. The reason for this is very clear. The supply price is equivalent to all costs, including production and product development, management, distribution, and advertising. Of course, the strategy of a company requires that a particular product be offered in a particular market for a certain amount of time at a price below the price that it would certainly not end up with. The price plays a key role not only in profitability but also in sales volumes and market share.

Sometimes one percent of the price increase can be up to 50 percent for a company to profitably. Especially for companies with a low profit margin, such as computer companies, smart pricing is a secret of survival and success. At the same time, price changes after the pricing are difficult, dangerous, and almost all customers have no realistic understanding of price fluctuations. After pricing, customers consider the price increase to be unaffordable and, on the other hand, the price drop has a negative impact on the value of the product and may reduce the share, market share, and profitability.

Therefore, it can be said that price is an important part of the marketing strategy. In addition, the price is an essential element of the transaction between the company and the customers, and sometimes it is the only factor for decision making to buy a product. Correct pricing in technology products is usually not easy. The physical part of products has high prices. For example, the average cost per kilogram of materials in making the satellites is 20,000 times the value of one kilogram of material in the construction of the building and 2000 times the value of one kilogram of material in the making the car, which is why the prices are barely set by market agents. The statistics show that in pricing these products typically in each case 50% of executives, 40% of sales executives, 30% of pricing committees and 20% of marketing directors are involved. In a world where products and the competitive position of companies are changing rapidly, managers need to know how to adapt themselves to different circumstances. They first determine the price based on commonly used pricing models based on all the necessary parameters and then improving it by using policy frameworks, company and market constraints. After choosing and fixing the right price, all behaviors of competitors, customers, and market agents are anticipated.

This policy can vary depending on the source of income. For example, a hardware device, a computer or a satellite can be sold directly, on the other hand, it can be rented. But in the case of software or some technologies, the story is a bit different. For a group of these products, licenses are issued and sold. This subscription is a password that has an expiration date and usage that is subject to that as well as the amount of access priced. In these cases, all sources of money will be affected and priced. Supply and demand are one of the major drivers of dynamic prices, and companies are careful to keep things in check. The price of a product always fluctuates between the two upper and lower points. Price ceiling and floor price. The price ceiling is the price that your customers will not be willing to pay more for your product. You may produce a product that the market does not stretch, and it is precisely for this reason that many ideas will never be commercialized. The price of the ceiling is determined by the market and determined by the price elasticity of the demand in the target market. However, this number may also affect production processes and create changes in production. The floor price is primarily determined by the manufacturer and is specifically calculated on the basis of costs.

Finally, only after the product is sold, we can have the right comment about its pricing. Companies often change prices after sales. As prices go up, customers are forced and in spite of their intrinsic desires, and as the price rises, the number of customers drops rapidly. Price reduction also has its own consequences. Reducing the price avoids the company from its slogans. But often the price reduction with the policy of increasing the volume of sales is synchronized, and companies, prefer greater volumes to unit profits for different reasons. Do not forget, it's not always a low price or discounts policies that the manufacturer has as his main weapon. Instead, sometimes by raising the price, you show the higher level of quality and performance than your rivals. It's just the example of Apple's approach, and because of that, it displays the quality and innovation of its products against its The physical. This method was proposed by Steve Jobs, who extracted it from a successful model of B.M.W products. 

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Pricing In International Markets

Pricing Principles

All organizations and companies set prices for the goods and services they offer. The price of goods and services in marketing is the amount of money or cost the buyer is willing to pay in exchange for receiving them. This price may be in the form of various concepts such as tuition, subscriptions, rights, rentals, etc. Among the components of the marketing mix, the price is the only factor that generates revenue and the other three are part are costly for the company. This makes it even more important factor in the marketing mix. Also, the price is the most flexible component of marketing mix because it can be changed quickly. Although price competition is one of the major issues faced by companies, many companies cannot solve this issue in an excellent way. By aligning the quality of the goods of different companies and intensifying competition, the price element has become one of the most important factors in maintaining, attracting customers, their loyalty, and satisfaction. This is the case nowadays due to the growth of the Internet and social media networks.

Definition of pricing

The pricing is based on estimation, evaluation, size and standard. The price in the market is the exchange value of goods and services expressed in terms of currency. Accordingly, pricing simply means determining the price for a good or service. It is an activity that needs to be repeated and is a continuous process. This continuity is due to environmental changes and the lack of stability in market conditions, which justifies the need to repeat this process.

Importance of Pricing

Providing better products than other competitors and taking the right steps in choosing a strategy to achieve a favorable position against competitors is an important part of achieving profitability in the business model. Therefore, a firm must be able to price its products and services in such a way that it can generate revenues proportional to the value provided to the customer and thus maintain its position vis-à-vis customers, complementary goods, competitors, and potential newcomers. Pricing is the most important part of the business model and decisions about it, have a huge impact on the profitability of the firm. 

Successful pricing will be accomplished by answering some important questions:

– How should the price be adjusted to cover the benefits that the firm offers to its customers and the cost of these benefits? 

– How long should the firm cut or raise its prices? 

– What will be the reaction of competitors and customers when the firm is raising or lowering its prices? 

– When the firm should sell its products with very low price?

Pricing in the international market

Although price competition is one of the major issues that companies face it in international markets, but many companies cannot solve this problem efficiently. Price is one of the most important and effective factors that helps companies to attract customers and keep up their loyalty and satisfaction because the quality of the goods and services from different companies is booming, and the competition among different companies are intensifying.

Pricing on global markets is more difficult than pricing in domestic markets. In the domestic market, the manager knows the effects of the cultural and economic environment on pricing policies. But in the international markets, due to the lack of familiarity with foreign markets and the variety of those markets, it is not easy to decide on pricing policy. 

In international markets there are fierce problems in pricing: the difference in customer response to pricing strategies by commodity in different markets, the limits imposed by governments on the level of profits and prices, the competition that determines price changes in the market, and the existence of different rules. But despite these problems, a company that wants to compete effectively and reach its goals in terms of sales and profits should consider pricing, local conditions and coordination with other elements of marketing mix. In international pricing, in addition to factors affecting domestic pricing, other factors should be considered, such as exchange rate fluctuations, currency with which prices are announced, government control over tariffs, and a group of economic and cultural factors that are found in different markets and differ with each other.

A company must have a clear understanding of the international marketing environment before deciding to expand its activities abroad. In an international pricing strategy, managers generally face a wide range of external and internal factors, and the main concern is how the managers come to terms with these factors and determine their final effect. Additionally, they should consider the political, cultural, linguistic, economic and legal differences in each market in global environment.