Price is the amount of money an organisation charges its customers for its good or service. Pricing is the only single element of the 4 Ps that produces revenue, as all others generate costs.
Pricing strategies should consider unit costs, competitor pricing, the product life cycle, the current state of the economy, and consumers’ perception of the value of the product (branding) when they weigh its price.
There are several types and tactics used in Pricing. The most common ones are presented below. Note that payment arrangements and credit terms should be considered when applying each type.
The first three Pricing tactics might as well be formulated by non-profit and public organisations (with certain adjustments as related to the organisational strategy).
A Refresher on Price Elasticity
Price elasticity of demand refers to the measure of a percentage change in quantity demanded for a product, relative to a percentage change in its price, which would determine whether the demand for a product can be classified as Elastic or Inelastic.