Formulating a Pricing Strategy

The need for a pricing strategy arises either when a new product or a new sales ,channel is introduced or when competitors change their pricing strategies. The pricing of a product will decide the revenues and profits the sale of that model would generate. Firms have to take utmost care in fixing the price of products. Pricing is a factor that helps in gaining competitive advantage and capturing market share. To fix a reasonable price for the product, costs have to be reduced. The access to online resources for market research and the ability to effectively communicate between suppliers and customers brings down costs considerably. Since the firm has access to several suppliers, competitive bidding is possible.

The online pricing database can be used to store multiple pricing schemes in a single repository. This single repository will be able to meet the requirements of different types of customers. Pricing inquiry, online order management, product configuration and customer history are the supporting functions to this process. They help in reducing both costs and cycle time. Costs are reduced by the use of a single repoAtory of pricing information. Since all the pricing data is available at a central location price changes can be analyzed quickly, thereby reducing the cycle time.

Pricing information databases have changed the way in which pricing data is updated and had decreased the time taken to inform customers and others about price changes. These databases help in updating and disseminating the information about the prices quickly to employees, customers, vendors and other intermediaries. When all information about pricing for different types of customers is stored in one repository and is made available online, the cost of publishing price catalogs and their cycle time are significantly reduced. Online price updates and online order management are the two enabling technologies for e pricing. These technologies facilitate price determination and monitoring.

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