Ever wonder how companies arrive at their pricing strategies? Are you yourself struggling to arrive at the right price point for your products or services?

It is certainly no easy task – and there is no set formula for it. But there are some guidelines you can use. Let’s take a quick look at three considerations:

• Analyse two key important ingredients: Market forces and economics. Yes, dive into what your competitors are charging, and use that to get a feel for what the consumer is willing to pay. That is your best starting point.
• Take an honest look at your business goals: Are you after market share, maximising profit, or trying to defend your existing market? You may find that your pricing strategy will need a fluid approach – adjusting it as you go along to meet your present goals.
• Is value-based pricing for you? Traditionally, companies have dealt with pricing challenges by employing three principal approaches to setting prices: cost-based pricing, customer-based pricing, and competitor-based pricing. You will need to explore these concepts thoroughly to support your pricing efforts.

Remember that it is crucial to create a pricing strategy, whichever one it is, that suits your company’s current situation, cash and other constraints. It’s often a complex mix of ideas and approaches against the backdrop of a fluid market, but it has to be reality- and strategy-lead.