I need to respond to my classmate in 250-300 words in APA format with citing, she wrote:
Pricing can be a tricky business strategy, you must be low enough to be competitive but high enough to make a profit. However, how cannot just consider the competition when setting your price, you must consider your customer. Determining your target market is an important step in the pricing process. “Pricing must always consider the segment you are after.†(MaGrath, 1991, p. 18) While you may feel that your product can demand a high price tag based on the quality of your service, your target market may not be able to afford the product or service. Another important concept to consider when setting prices is the break even point. “Breakeven is the point at which fixed costs are recovered by sales, but variable costs are not included and not profit has yet been made.†(Glackin, 2016 , p. 187) The price must be set above the breakeven point and must also cover the variable costs and a profit or the business will not be able to succeed.
When deciding to use a 3D/4D Ultrasound studio for my business, I had to consider the prices being charged by my competitors, the location of my competitors, and the market segment I was trying to reach. “Price is the mechanism that allows the firm to generate a profit. Because most firms attempt to maximize profit, marketing managers must be careful to set a price that allows the firm to reach its profitability objectives while not exceeding what the customers will pay.†(Hawes, D Amico & Baker, 1995, p. 285) While families of all income levels have a desire to see their baby, not all families are going to be able to afford the extra expense during a very expensive time in their lives. After determining the breakeven point, I decided we could match the price of our lowest priced competitor, for our 30-minute scan. However, to include families of lower income levels we decided to offer a shorter quick-peak scan at a lower cost. Then for those who want a more luxurious experience, a premium scan that would be priced higher but include extras not available with the other scans.
References
Hawes, J. M., D Amico, M.,F., & Baker, T. L. (1995). Simultaneous use of break-even and demand analysis for pricing decisions: A teaching method. Journal of Education for Business, 70(5), 285. Retrieved from http://eres.regent.edu:2048/login?url=https://sear…
MaGrath, A. J. (1991). Ten timeless truths about pricing. The Journal of Business & Industrial Marketing, 6(3), 15. Retrieved from http://eres.regent.edu:2048/login?url=https://search-proquest-com.ezproxy.regent.edu/docview/222060628?accountid=13479
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