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The term “good and cheap” is well known to Brazilian consumers and industry. However, often for a small company offering a “good and cheap” product is not simple.
I realized this when I received a call from a customer, from a small factory, asking for help in calculating the unit selling price of a product. The logic that was being used by him in the formation of the selling price was the multiplication of the cost of the product by the desired profit margin (Unit Cost x Profit Margin). However, when studying the case, I realized that the calculation was wrong.
After doing the calculation correctly, we came to the conclusion that his factory was losing money, since the announced selling price was below the desired profit.
From the expression “good and cheap”, the term “good” is abstract and for this reason I wrote an article about the quality of products . The term “cheap” will be discussed below.
Important elements for composing and setting the sales price
Pricing is generally linked to the company's strategic plan . For example, Ford at the beginning of the automobile industry had the idea of selling cars at lower prices than the competition, as it had realized that Mobile Number List there was a demanding market for cheap cars and that they were useful in their end goal, which is locomotion. Ford began mass production of standardized cars and invested in operational efficiency.
Michael Poter wrote the book Competitive Strategies, which addresses the generic strategies that a company can assume:
Total cost leadership – Price is the main attraction for consumers. Here, the company seeks to achieve high levels of operational efficiency and cost reduction.
Differentiation – A differentiated product is the main attraction for consumers. Here, the company seeks to differentiate the product from competitors in order to add values that are perceived only when its products are consumed, differentiating itself from competitors.
Focus – Segment is the main attraction for consumers. Here, the company seeks to serve a certain segment, which could be a region, a group of consumers, among others.
Therefore, a factory can follow different types of strategies and the final sales price will be directly related to the generic strategy intended by the company, be it cost leadership, differentiation or focus.
See too:
Cost management and pricing: 6 steps to increase your company's profit
Learn how to calculate the selling price of your products
Before forming the sale price, you need to know some concepts that Thiago Leão explains very well in the post that talks about fixed and variable costs . After that, I recommend you get the information below.
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发表于 2023-8-31 11:59:47