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Everyone who is implementing a business idea shall deal with a Pricing Strategy: How to choose the best fee to charge on your customers and place yourself in the optimal side of the market is the aim of this video

 My name is Giorgio Torre, I have 10 years international experience in PM &Business Making and this, is a content by HuBibi.

Let’s first start with the main types of pricing analysis which are mainly used worldwide:

1.  Cost-based Pricing:

Cost-based pricing is when some percentage of desired profit margins is added to the cost of the product to obtain the final price.

2. Demand-based Pricing:

Here the price is finalized according to its demand. If the demand grows, the prices grow as well, which leads to the fact that the success of demand-based pricing depends on the ability of marketers to analyze the demand.

3. Competition-based Pricing:

Where the organization merely considers the prices of other market players which are basically competitors.

4. Other Pricing Methods:

In addition to the pricing methods, there are other methods that will be shown in this screen (Watch Video): 

i. Value Pricing:

When an organization tries to win loyal customers by charging low prices for their high- quality products. Value pricing is also called value-optimized pricing.

ii. Target Return Pricing:

Helps in achieving the required rate of return on investment done for a product.

iii. Going Rate Pricing:

Where the price is settled according to the prevailing price trends in the market.

iv. Transfer Pricing:

Involves selling of goods and services within the departments of the organization. One department of an organization can sell its products to other departments at low prices. Sometimes, transfer pricing is used to show higher profits in the organization by showing fake sales of products within departments.

So how can I estimate the best price or fee I should charge to my customers?

This is what I would do if I was founding a startup right now. Regardless your startup is a Saas, Marketing House, FinTech, PropTech or AI I would consider the following algorithm:

a) Apply a Cost-Based Pricing analysis, which involves in identifying all the source of expenses which are connected to your service. Make sure to not exclude any source of expenditure and be precise in the process of computation.

b) Appy a demand-based Pricing analysis, which involves in evaluating if that target customers have currently access to a market alternative. In other words, If your startup is the only one in the market providing a specific service, you will be more free to decide whether to increase or not your prices.

 c) Apply a Competitor-based pricing analysis, where you can compare your prices with the ones of your competitors and decide how much to be higher or lower.

 d) Then apply the rest of the pricing analysis

I have listed a sequential series of pricing methods that absolutely should be considered as a whole. What I have already explained makes sense in the only case you integrate the results you have computed. You have to accomplish what I usually consider the mathematical range interception. 

So guys, I hope you enjoyed my article and I hope it was helpful to you all. If you have any doubt or enquiry, please don’t hesitate to contact me via LinkedIn or via email. I will respond to everyone will need help, especially in these very hard times.

 Ma’assalam!