Pricing Assignment

Pricing Assignment

Webster University

Procurement Pricing Class

PROC 5830

Gene Townsend

July 1, 2015

Pricing Article Assignment

The pricing article that will be discussed in this assignment is "Getting it Right: Pricing Strategies That Work" (Rao, 2014). The article was designed to provide expert insight on how successful entrepreneurs deiced to establish a price for their business and the products they sell. The information used to write this article was personal interviews of over 20 hundred-million-dollar and several billion-dollar entrepreneurs conducted by the author. The entrepreneurs provided insight on some key strategies that helped each company to effectively establish its individual pricing targets. One key aspect is that half of the companies used higher prices by “offering more value and knowing how to sell that value” (Rao, 2014) to achieve higher profits and link them to a value desired by the targeted audience. Some owners used a strategy called product merchandising where companies used a technique called high-low pricing strategy. This technique uses lower prices on a few items to entice customers, followed by higher prices on other products to produce a decent profit.

One of the first areas presented for discussion is knowing the customer’s needs and developing a strategy to fill that void. This focus is important due to the fact this void provides the company with an area that can be targeted when selecting products to bring to the market place. The designed profit object for each company can be contributed to a perceived value for each customer with their ability and eagerness to pay for that value. “Products with more features and benefits can be priced higher” (Rao, 2014). In addition, one should design merchandise after consideration of the type of customers the company is attempting to attract, as this will increase the profit margins....