The Pricing Policy In The Context of Marketing Mix

When it comes to pricing policy as a marketing instrument, it is primarily about finding the optimal price for your product. While the government has a role in imposing SRPs (suggested retail price) on many merchandises, your prime costs, strategic positioning, and competition are the most important factors influencing pricing.

Other factors in the pricing policy are the right price model, discount campaigns, or attractive financing models, which you can use to create positive incentives for a purchase decision.

The Pricing Policy In The Marketing Mix

The price policy is an important instrument in the marketing mix – as a directly recognizable differentiating feature, the price, in particular, serves as an orientation aid for the interested customer when making a purchase decision. Usually, a higher price is associated with better quality, while a lower price is associated with poor quality. It is therefore important to determine the right price when setting the price of your product.

In addition to the goal of increasing the profit for your company through an ideal pricing strategy, you should not neglect your competitors and your own costs when setting prices. The positioning, which you have already defined in the chapter on corporate strategy in the business plan, is also relevant for pricing.

In addition to pricing, other elements of pricing policy are also important in the marketing mix. Used correctly, you can create an incentive for a purchase decision with a carefully worked out pricing policy. You can find out below which pricing strategies you can use and why a 9.99 euro pricing makes sense.

Price formation: relevant influencing factors

Finding the “right” price is likely to be an impossible undertaking – after all, pricing is always about weighing up various factors (e.g. price/sales volume, sales/profit, influence on competitive behavior, etc.). Difficult, but not impossible is to determine a price that is right for your company. To achieve this, you should consider the following influencing factors when determining the price:

• Basis of pricing: the prime costs. The basis for pricing is the cost-covering price (price at which you can cover prime costs). When calculating the cost of sales, the first step is to determine the costs per unit (product = piece; service = hourly rate). Once you have calculated the cost, add the desired profit per unit, the profit margin, and you can determine the sales price.
• Don’t forget the competition when setting prices! Once you’ve figured out the selling price, it is time to take a look at your competitors. Check what market prices are and whether your set selling price is realistic. To do this, you usually have to do market research.
  The VR industry letter could be helpful, where you can find figures and data on the cost structure and the average profit margin of the respective industry. If necessary, take a look on the Internet to see the prices at which competing products are offered on online portals such as billiger.de or amazon.de.
• Pricing check: Does the price match the positioning? In the chapter on corporate strategy, you determined the positioning and thus answered the question of whether you, as a cost leader, want to offer cheaper products, as a quality leader in the premium segment, or whether you are pursuing a less price-sensitive strategy as a niche provider.

Now you should check whether the sales price you have set fits your positioning. If this is not the case, you have to think again about the pricing or adjust the strategy if necessary.

In every business, it is important to assess your product or service in order to fit it in the pricing mix. For example, in the car accessories business, specifically car covers, you would like to know how relevant is your product to the market in order to determine important factors in sales such as pricing. So apart from asking do car covers work, you should also ask what price policy matches car covers.