ABSTRACT
Pricing is the ultimate generator of revenues and profit. Although pricing strategies are somewhat different for products than services, be it price or rates or fares, the strategic marketing objective remains the same—maximize sales/revenue. In its simplest definition, pricing is the monetary value of a product or service. Pricing is directly reflective of your image, positioning statement, and perceived brand value. Many issues affect price. Certainly the cost of providing the product or service, competition, stage of the product life cycle, and market demand play major roles in determining a pricing strategy. In addition, the product type, seasonality, uniqueness of the product/ service, trial or introductory offers, and new product/service improvements may influence pricing. With respect to demand, some products/services are referred to as either inelastic or elastic. A price-inelastic product or service is one for which demand will remain relatively the same when the price is raised or lowered. Many top-end luxury products/services fall under this category, e.g., Rolex watches, Mercedes-Benz autos, etc. Likewise, certain necessities such as water, needed medical supplies, etc., could be considered more inelastic than elastic. On the other hand, a price-elastic product or service is one for which the demand will increase or decrease in relationship to an increase or decrease in price. An example would be an increase in airfares, new housing, and related interest rates, etc. At the outset of determining your pricing strategies, you should view your product/service/brand category to determine its relative price elasticity.
