how to approach a Prcing case?
My usual approach is:
First, I would analyse the clients comoany (meaning market share, product, costs, financial data) and what is the goal (gain market share? max profit? response to a (new) competitor?).
Second, I investigate the market: competitors and their products (substitutes?) and prices.. benchmarking. In addition to that, analyse the costumers (what are they willing to pay).
Third, I choose a pricing strategy taking into account the following:
- Cost-based: P=R-C (ineffective)
- Value-based: compare the values of your product vs. competitors. Is there value added and are costumers willing to pay more? => higher price.
- Competitor-based: set a price based on the second step of the approach (benchmarking).
Is there a better approach/framework? General things to consider in pricing cases?
Thank you very much!