Summary:

Developing a pricing strategy can be difficult, especially in an economic recession. Dana Baldwin, Senior Consultant with Center for Simplified Strategic Planning, Inc. believes the key is to strategically determine the pricing band, which is best for your product/service in light of current conditions . He goes on to write that pricing policy is one of the most strategic issues that a company can deal with-both for the short term and the long term as it directly influences market strategy.

To begin with, you need to determine where your products and services are positioned in your market place.  Each one of your products need to be analyzed in terms of where it is located on a spectrum from pure specialty to pure commodity. Nearly all products have characteristics of both specialty and commodity products. The challenge is to determine the behavior of the specific product or service in each market in which it competes.

Article Quote:

“Pricing can be very tricky in times like the ones we are going through currently.  Too high a price and you can lose considerable volume, customer loyalty and market share.  Too low a price could lead to diminished profits, commoditization of the brand or product/service and lower long term prospects.”

Link: http://www.cssp.com/strategicplanning/blog/?p=539

Developing an appropriate pricing policy needs to be determined in order to keep customers while not loosing potential profits. Market intelligence research should be conducted before any decisions are made about pricing and where to offer products. Pricing strategy is just one element of the business plan that needs careful attention when developing a clearly defined strategy.

For more on strategy, see http://www.performancesolutionstech.com/category/strategic-manager/