Video Transcript: Pricing Strategies

Hello, welcome. We're going to be discussing pricing strategies. Price strategy  only p in the marketing mix mix that generates revenue. Obviously it's the pricing strategy. This is the price they're going to pay. This is the this is the dollar  amount that they're going to give us for our product. The complex process  determines value consumers will exchange for the offering of your product. So  we're determining the price. Pricing supports marketing objectives, right survival  of the company. We'll be able to cover variable costs and some fixed costs keep  prices low to stay in business, right? We want to be able to sell in volume at  times, right? We don't want to be overpriced. We won't be priced too low, but we don't want to have the highest price in our industry or our market either. Often.  Strategy for startups, right? Survival strategy. They've got to survive. They're in  the startup phase. They need to make sure that they are very cost conscious  profit objective. Choose the price that creates maximum profit. So you can run  through several scenarios. You can price at this quantity and this price and  project sales, the number of units sold, and then what are the costs associated  with this output level, and how much are we going to sell at this price? And this  will be our revenue, these will be our cost. And then we can go through and then kind of project profits. So we need to run through scenarios with different price  points and different sales volumes to find the right mix for maximizing profit.  Volume objective use pricing to increase sales volume. How do we do that?  Right? We're going to find an equilibrium price that we want to supply this for,  that's going to meet the demand, right? So we need to. Are we going to sell  more at a lower price? Sure, but are we going to push the price down so low  that we're going to break even or potentially lose cash. We shouldn't do that. We need to make sure that we are operating at a marginal cost equals marginal  revenue basis, and you'll see later on that marginal cost equals marginal  revenue will give you maximum profit, volume, objective, use pricing to increase  volume so maintain or increase market share right through, through pricing so  we can take more market share With the right price, with the right quality. High  obstacle for competitors is pricing around you, if you are priced just right,  because if they're too low or too high, that's going to impact their sales, and  you'll be able to capture more market share. Product quality, objective, high  prices to cover performance, quality, research and development branding. You  may see that early on and the business life cycle, because they are going we  are going to have to perform high quality research and development, and also  we're gonna have high marketing costs develop and maintain an image of  quality and exclusivity, right? So we want to make sure that we're differentiated  from the competition that's going to be our competitive advantage pricing  strategy for profit. So this is a pricing strategy matrix, right? So we can look low  price, low quality, economy right. Think about economy cars, right. They're high  efficiency and fuel, they're probably a four cylinder, right? Probably low weight,  not a lot of bells and whistles. Economy car, right? So then high price, high 

quality, the profit in the image. So premium quality, high price, high quality, can  say Mercedes or something like that, right penetration, good quality, low price,  we want to penetrate the market with a good quality product at a low price, so  

we can generate high sales volume, price skimming good quality, high price,  right? We're trying to get that marginal revenue, increase that marginal revenue  by having somewhat of a higher price, because people will pay for our product  because they know it's good quality. So we're going to skim a little extra off the  top, because we can people trust our quality product pricing strategies for a  nonprofit. So market incentive, right? What is the incentive for us to exist? Why  are we here? What are we offering? Price is low to encourage use, right?  There's a public transit, right? Public. Transit. It's low price, $1 for a ticket. I can  ride the bus all across town, and I can go where I need to and, you know, it's like a public utility. It's useful for everybody that wants to use it. So cost recovery,  how quickly is a nonprofit going to recover their costs, or are they going to  recover their costs? Maximize Revenue potential we have as a nonprofit, you  have got to maximize your revenue potential because you're not going to  generate profit maximization. So we need to generate revenue maximization so  that we can continue to increase business operations. Therefore we need  volume. We need volume from donations, or however we receive our revenue, it needs to be in volume. Alternative pricing strategy, promotional, right? We run  promotions. We want to get our products out there right. We put coupons in the  newspaper right? Short Term pricing strategy, we're going to offer discounted  prices for a 90 day period geographical but say, you know, we're in the  Southwest, and we sell tamales, and we're going to offer a discount in the  southwest, because there's going to be a lot of people buying tamales.  Variations demand and operational costs, right? So demand is going to vary at  times. So therefore, we have to be flexible in our operations to control  operational costs, to offset any kind of decline in revenue through decline and  demand. So value? Are we going to offer a value product, right? Are we going to offer them bang for their buck and have them buy in volume because it's adding  a benefit to them. Recession competition, right? There's a recession. We need  to be pricing accordingly, right to recessionary prices. You know, inflation is  going to be low at this time, so we can probably bring our prices down too. And  we need to be mindful of the competition and their recession pricing strategy. So the marketing mix, again, we discussed this earlier, but our product  differentiation, our place promotions, price, right? All of these consists of the  marketing mix.