LONDON–(BUSINESS WIRE)–A well-known market intelligence company, Infiniti Research, has announced the completion of their recent article on pricing a new product: the right product pricing strategies to follow. One of the key questions to answer while launching a new product is how much the product should be priced at. This free supplement provides key insights into different pricing strategies that companies can consider for a new product.
Businesses and consumers alike are now demanding more for less, making it even more difficult for brands to formulate favorable product pricing strategies. Factors such as global competition, increased pricing transparency, and lesser market entry barriers across industries are forcing brands to rethink their product pricing strategies. Before finalizing the price for a product, companies must have a clear estimate of the highest and the lowest price that they could charge for a product. Then a detailed price-benefit analysis must be undertaken during the preliminary stages in the product development cycle to understand the attributes of the product for which the consumers will be most willing to pay for.
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Product pricing strategies for a new product
Pricing a new product is often one of the key challenges faced by companies while launching a new product. Setting different prices for different market segments is a strategy that brands may consider. In order to enhance profits, markets can be split into sectors based on differences in price sensitivity.
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Companies often get tempted to build market share by adopting aggressively low pricing strategies for a new product. This competitive product pricing strategy is known as penetration pricing. However, this could considerably reduce profitability and ignite a price war. As a result, it is generally advisable to keep upward pressure on prices and promote good industry pricing behavior.
Cost compression curve pricing
Cost forecasting for pricing new products is based on the cost compression curve, which relates the actual manufacturing cost per unit of value added to the cumulative quantity that is produced. This cost function is mainly the consequence of cost-cutting investments to discover and achieve internal substitutions, automation, worker learning, scale economies, and technological advances. Such product pricing strategies are highly effective when the product superiority over rivals is minimal and when entry and expansion by competitors is easy.
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About Infiniti Research
Established in 2003, Infiniti Research is a leading market intelligence company providing smart solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies. To know more, visit: https://www.infinitiresearch.com/about-us