challenging especially for a new venture. Yet you need a picing strategy for your business plan to determine your break-even point Ultimately, the right price is usually the highest price customers will find attractive that is to say, that they will find meets or exceeds and profitability, and of course to launch your business. Here are PRICING STRATEGIES Figuring out how to price your products or services is a very some tips on how to make that decision their value expectations for the product or service you're offering to them. That's much easier said than done, so let's start with some steps for getting there. First, Determine Your Unit Costs Generally this should be relatively easy. What will it cost you to purchase, produce and sell your products? You may not know the precise figure, but you should have a pretty good idea by the time you write your business plan. Generally speaking, that represents your price floor: sell below that and you lose money. Next, determine how customers value your products This is where market research is needed. The good news is that customers will tell you how much they'll pay - if you can find the right way to ask. You can't just ask them directly, for tons of research show that what they say and what they'll do are two completely different realities. But what you can do is find out what they pay for more or less comparable things, and how they value various attributes of your product or service, particularly those different from your competitors. Be sure to study the pricing strategies of your competitors. Not necessarily to imitate but to recognize that your customers will be comparing what you offer (product, price, service) with what they offer. Here are several of the most common pricing strategies: Penetration Pricing This is the low-cost approach, where you initially offer a price lower than your competitor's for the purpose of attracting price-sensitive customers quickly. The downside of course is that you squeeze your profits: Indeed in many cases new ventures choose to price below Soat to bring in those early customers. The logic is that over time you become more efficient and can take advantage of bulk purchasing of raw materials, such that you begin to achieve profitability at that low price. The other disadvantage is that your competitors might just match your price Premium Pricing This kind of pricing is coupled with providing superior benefits or service compared to your competitors, to justify that higher price Sometimes a premium price will be charged for some products to attract customers who want that premium quality, with other products are priced lower to attract those who are more value-focused. A related pricing strategy is called Complementary Pricing, or LOSS Leader Pricing, where you charge and promote a super low price for one product to bring folks "in the door," but then upsell them for something else more expensive at the point of sale. Price Bundling This is a common strategy for getting customers to buy more of your products, by offering a deal for buying a package. Purchase internet access along with your phone service for a discounted price. This strategy can be very effective in that the customer perceives value, while the provider increases sales and, ideally, a long term customer who spends more for each purchase. New Customer Pricing Sometimes called experience pricing, this involves offering a low initial price for new customers, occasionally below cost, to get customers to "try" your product. It's a one-time price, offered in hopes that while they'll come in for the low price, they'll come back for the high quality. This is sometimes done with special coupons, and, in today's world, is often facilitated by group purchasing services such as Groupon ANSWER THE FOLLOWING QUESTIONS: SX pornis 1. What are the steps for deciding what will it cost you to purchase. to points) produce and sell your products? a) b) 2. What is the low-cost approach? 3. What are the disadvantages of the low-cost approach? 4. What are the advantages of price bundling? 5. Explain the term: experience pricing. MATCH THE TERMS UNDERLINED IN THE TEXT WITH THEIR EXPLANATION 1. an amount or value expressed as a number: a symbol representing a number to be greater than; go beyond; surpass 2. 3. make easy make possible. 4. 5. coming first, or present at the beginning of an event or process. to estimate; to rate something according to its perceived worth, importance, or usefulness. 6. earnings. to begin a carefully planned activity and promote it. 7. 8. characteristic feature.(n) 9. offer something for sale at less than the usual price; reduce. 10. to buy something using money: obtain