What setting the right price has to do with marketing

Marketing encompasses a number of things. Marketing professionals work to promote a specific product or service for the company and work hard to get to know the products the company provides and the customers and their needs, and then work to anticipate what the next product will be and how to promote it.

Another part of marketing is pricing. Setting the right price is an important aspect of marketing. Pricing can literally make or break a company by sending it to bankruptcy or resulting in a nice profit.

There are five main types of pricing strategies. These are:

Product Line: This type of pricing sets the prices for all of the products or services within a particular line.
Optional Product: This is the pricing of optional parts, or accessories to a product. Cars are a good example of optional product pricing.
Captive Product: This is the pricing of certain products that can't be used without a main product. So let's say your company sells printers; the ink for them would be an example of a captive product.
By-Product: When you price by-product, you set a low price for the main purpose of getting rid of the item.

When it comes to marketing and pricing, there are a number of things you need to consider when pricing your products and services. The following are some tips for setting pricing:

Do your research. Research is crucial when it comes to pricing your products and your services. Check out your competitors in the area, and see what they are charging for particular products and services. If you plan on charging more than they do, make sure you have a justification for doing so. For example, you could point out 24-hour customer service or higher quality materials or ingredients as a reason for higher pricing if the subject comes up with your sales prospects.
Don't set the price too low. In your marketing strategy, it is important not to set your price too low. While you may think, especially in the beginning, that this will help draw customers to your product, it could actually have the opposite effect. Your potential customers might wonder what is wrong with the product or service if it is offered so inexpensively.
Don't set the price too high. Ridiculously high pricing without a good reasoning behind it will turn customers off and could mean the end of your business.

Additionally, an important part of marketing and pricing includes setting price adjustments. Some of the more common types of price adjustments that your marketing department will have to consider include:
Psychological. This type of pricing adjusts the price of a product for psychological effects; for example, paying $199 instead of $200. The difference is minimal, but the customer is more likely to see it as a bargain.
Promotional. This includes temporary reductions in prices to increase your sales in the short term.
Discount and allowance. This type of pricing is designed to reward customers. It can include a reduced price for signing up or paying early.

Setting the right price for your products and services goes hand in hand with marketing. Marketing professionals must know enough about the demographics of their customers to provide the right pricing in order to retain their customers as well as continue to make a profit.

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