What is the price? What are the main pricing strategies?

Price is the monetary cost that consumers are willing and able to pay for goods. This is the most fundamental source for enterprises to pursue profits.

Generally speaking, the factors that affect pricing are as follows:

1. product cost: the bottom line of pricing is product cost. Generally speaking, the pricing cannot be lower than the product cost, otherwise the company will face the risk of loss;

2. Customer's price sensitivity: This is basically the ceiling of pricing. Above this price, customers will face the risk of choosing other products or losing customers;

3. Other internal and external factors: such as the price and strategy of competitors, the characteristics of market demand, and the marketing strategy of the enterprise itself.

So, generally speaking, there are three pricing strategies:

One is pricing based on customer perceived value. This method needs to evaluate the customer's demand and value perception first, then set the target price according to the customer's perceived value, and then use this value and price to determine the target cost, thus guiding the design and development of products.

The second is cost-based pricing. This method needs to determine the cost benchmark of manufacturing, distribution and sales, and then add the target profit rate to the price. This pricing method is common, and reducing costs is also the goal and direction of many companies.

The third is competition-based pricing. This way is generally based on market conditions, competitors' strategies and prices, targeted and strategically set the price of their own products. Monopoly-the competitiveness of the market, the advantages and disadvantages of one's own products relative to competitors are important considerations.

At the same time, there are some external factors that enterprises need to consider when pricing. For example, the profit space needed by middlemen, government and related policies, public opinion, etc.

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