Question

How would you price a new product or service that has never before been offered to the market? What are some pros and cons of increasing the price of products in declining markets?

Answer 1

Below are the steps to be considered during pricing of new products or services.

• Cost of raw material should be considered.
• Production/manufacturing costs
• Labour cost
• Inventory carrying cost
• Supply chain and logistic cost (Transportation cost)
• Cost involved in marketing and advertising.
• Other costs such as rent of industry, electricity, water, maintainance cost etc.

All these cost are together gives the overall cost of products. Hence based on the number of products manufactured individual can calculate the cost of producing single product.

Based on the cost for single products, company can add the profit margin. Eventually company can fix the price of the product or service.

Pros of increasing the price in declining market.

• Helps the company to make more profits.
• Ease the company compition against potential competitors
• Enhance the company brand image.
• Enhance the rate of investors to the company

Cons of increasing the price in declining market.

• Increasing the price may reduce the customer rate
• Reduce the sales of company products and services.

Note: " If you like the answer or solution kindly up-vote my answer, this will be quit encouraging for me. Thank you "