Profit - Oriented Pricing Strategy - Explained
What is a Pricing Strategy focusing on Profit?
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Table of ContentsWhat is a Profit-Oriented Pricing Strategy?
What is a Profit-Oriented Pricing Strategy?
A profit-oriented pricing strategy 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 of units sold. So, setting the highest price is not always the way to maximize profit.
Next, one thing that we need to keep in mind if we take a profit-oriented pricing strategy 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 market share.
So, these are different ways that we could go about devising our profit - oriented pricing strategy.