To set a pricing strategy, there are number of steps taken into consideration as follows:
Step 1: Our pricing objectives are to maximize market share and increase sales volume. This strategy will be used when TrackR is being launched into the market. We charge a reasonable price in order for TrackR to be accessible in the market as quickly as possible and also to encourage the interest and excitement of a product. Because of the low price, we are able to raise the sales volume easily, maximize the market share and reach the economic of scale as soon as possible. In order to boost the sales even more, we will offer promotion followed by the product launch, which will later be discussed in the later section. Eventually, we can penetrate the market and create brand awareness.
Step 2: Being a monopoly of TrackR, we have a sole power of controlling price and quantity, but before we set a final price, we must observe the demand. TrackRcan be classified as normal goods for specific groups of people. While the price remains unchanged, people tend to buy more normal goods when their income increases and they less likely to buy normal goods when their income falls. TrackR is price elastic meaning consumers are responsive/ sensitive to a change in price. If we decide to elevate the price of TrackR, the quantity demand will be declined.
Step 3: We also need to estimate the costs associated with TrackR. All costs can be broken down into 2 categories; fixed costs and variable costs. Fixed costs include salary, rent, PR and promotion and sales promotion, which come down to 3 million baht per month while the variable costs comprise of unit cost, shipping fee and exchange rate which are 375 baht per unit.
Step 4: Analyzing competitors’ costs, prices, and offerings. Our competitors can potentially be online retailers, for example, eBay or Find my iPhone.
TrackR eBay Find my iPhone
$25 ~ 800 baht
No additional cost
Shipping fee + duty