Which is more detrimental to a firm, pricing your product or service too high, or pricing your product or service too low?

 

Pricing demands careful formulation of the strategy to ensure that there is the needed turnover and profits for the firm. Every company will alas use the most critical strategy so as not to price too high or too low. Whenever pricing too high will reduce the demand or the product. In the same way, pricing too low will reduce the possibility of earning the necessary profits. Every company will use three main pricing strategies when pricing the products to different sections of target customers.

Organizations need to first assess the competitors’ prices and the value of the target customers and then create the idea of the worth of their products. In such a case, the company will be setting prices near to those of the competitors. The companies will also use premium pricing aimed at creating a competitive edge above the competitors (De Toni, Milan, Saciloto and Larentis, 2017). The pricing will be made higher which will mean there is a better quality of the products over the competitors. From time to time, the company will aim at offering discounts aimed at attracting more customers that are loyal and giving value to the firm.

The organization will be using different channels to distribute the products which may also determine the prices of the specified products. The channels are likely to compete with each other to get the customers to make higher sales while at the same time reducing the cost of ensuring the products reach out to the customers at a better price (Deepak and Jeyakumar, 2019). Most of the distributors will always compete against each other in offering the company’s products. On better pricing, a company will be seeking to create a good relationship with the customers. The company will always be clear on the issue of the weaknesses. The intra competitor’s weaknesses will lead to changing prices. Some manufacturers as competitors will seek to maintain their retail prices to prevent enterprise competition within the organizations.

The pricing strategy will require better research and collection of the statistical data to ensure that the company will create a good resultant pricing strategy that is not too high or too low. In the first place, the company will use the customers’ feedback as one of the tools to get the customers' reaction to the prices. It will also use the sales data as another source of crucial information as well as going to the target customers and getting to know what they require to do on prices (Zhang, Jahromi and Kizildag, 2018). This will help create a clear competitive plan aimed at giving the best results in the organization.

The first step in implementing the pricing strategy will be to clarify it aiming at enabling the stakeholders in the organization to rally support to the implementation. It will include clarification of the pricing among other important strategies. The Company will then communicate the strategy to ensure that all the members understand it and to connect the organization in understanding the bigger picture of the strategy in whatever they do. The company will then ensure during the cascading that every stakeholder understands the goals and not lose the insight and keeps focused and effective. It will be necessary to keep on revisiting the pricing strategy from time to time to know whether the company is on target. The company will then adjust the pricing strategy to fit the reports (Cooper, 2019). Contingency intervention is good at any point in the development. Such may include a good focus on discounts among other ways to reduce the prices or make a better balance in the pricing strategy.

With the strategy and the effective implementation, the company will source for good competitive advantage. On the same note, the strategy will help the company to expand and be able to implement future strategies on pricing. A strategy will also make the company address any contingencies that might occur in the implementation process. These are some of the potentials of the overall performance of the organization. After all the main aim will increase the profits of the business which is the core of the business activities. It will be important to consider not to put too high prices or too low prices since each of these might be detrimental in a way. However, striking a balance on the pricing will ensure that there are better results in the organization.