It’s no secret that small businesses play a vital role in the Indian economy. The operation and revenues of SMEs contribute a great deal towards the economy as a whole.
There are various factors that affect a small business’ revenue potential. One of the most important is the pricing strategy utilized by you as an owner.
A right pricing strategy helps you determine the price point at which you can maximize profits on sales of your product or service. You need to consider a wide range of factors when setting the prices of your offerings. These include:
- production and distribution costs,
- competitor offerings,
- positioning strategies and
- the business’ target customer base.
Your customers won’t purchase goods that are priced too high. On the other hand, your company won’t succeed if it prices goods too low. This is because low prices will not allow you to cover all of the business’ costs.
Thus, product or service price can have a profound effect on the success of your small business. This is in addition to other factors that impact your business. These include the product itself, the place where it is sold and its promotion.
Here are some of the strategies businesses implement when setting prices for their products and services.