Pricing policy of the enterprise: the nature and the main reason for the application in practice
Benefits of pricing in the enterprise
The pricing policy of an enterprise consists in setting prices for goods and services at such prices that, if they vary depending on their presence in the market, the planned amount of profit is ensured.Thanks to these activities, it is possible to solve other related tasks. Pricing in the enterprise is an important factor that does not determine the amount of profit as it is a condition for the successful sale of goods. At the same time, the tariff for an enterprise as a tactical tool provides certain advantages:
- unlike other methods, which are aimed at stimulating demand, the use of price does not require ancillary cash costs, such as, for example, during promotional events, promotion and individualization of finished products;
- consumers note the attractiveness of goods, first of all, at their cost, and only then - on the basis of advertising;
- The price is used as a powerful means of maintaining such incentive methods as advertising preparation and sales organization.
Tactics and strategy
The pricing policy of the enterprise is reflected in the approval of the appropriate level. In other words, the accepted price level should reflect the priorities of customers, their expected benefits, which can be obtained from a particular product. That is why the pricing strategy of the enterprise should consider the price as an integral property of the product at the same time as the consumer properties of the product and its quality. If the value of the goods is too high, it is not purchased at all, and if it is bought, then in a smaller quantity. In practice, the pricing policy of an enterprise uses the following types of strategies:
- High prices. This strategy initially provides for sales at prices higher than production costs with their subsequent decrease. It finds its use in the sale of new products that are protected by patents.The application of this strategy is possible in the conditions of high current demand, as well as the adoption of high cost by the consumer as an indicator of good quality of the goods.
- Low prices. This strategy is implemented to stimulate demand, which is highly efficient with a high proportion of production, when it reacts quite sharply to a certain decrease in cost and an increase in demand.
- Differentiation of prices. This strategy is manifested in the application of tariffs with the simultaneous establishment of various discounts and surcharges (equalization to the average level for different markets, their customers and segments).
- Preferential prices. This type of strategy is aimed at implementing activities with customers, in the positive results of which the company should be interested.
Dependence of pricing policy on price level monitoring
In general, the pricing policy of an enterprise depends on the results of monitoring the level of prices, which are formed from the analysis of the prices of transactions after the fact or the auction prices, or stock prices, as well as reference prices.