Profit - Oriented Pricing Strategy - Explained
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All right. So as marketers one of the key
functions that we have within a business
is to determine the price of our
that may sound simple but there are a
lot of things that we have to consider.
First and foremost we really need to
make sure we cover our production costs
we also need to think about our strategy.
One type of strategy we might pursue is
what's called a profit oriented
pricing strategy. What does that mean?
it just means that we're going to set
our product price
based on a particular profit goal
that could be a target return meaning we
want to make a certain percentage on
each unit that we sell or it could be
that we want to maximize
profit. As you probably know raising
price will tend to decrease the number
sold, so setting the highest price is not
always the way to maximize profit
it can be a little more complicated than
we won't get into the details of
determining that I just want you to
think about this could be our goal
is maximizing profit.
Next one thing that we need to keep in mind
if we take a profit-oriented pricing
is this tends to put sort of upward
pressure on our price.
In other words if our concern is profit
we tend to price a little higher than if
we're more concerned with something like
So these are different ways that we
could go about devising our profit