As you know, to buy a product, consumers will usually look at the price. While flexible is a trait that relates to the position of a situation. So, in simple terms, a price flexibility strategy is in a situation.
Pricing flexibility strategies can be used to price different goods or products in different markets based on geography, delivery time, and product complexity.
Types of Price Flexibility Strategies
There are two types of pricing flexibility strategies, namely the one-price strategy and the flexible pricing strategy. Here’s the explanation:
One Price Strategy
The one-price strategy is also known as the single-price strategy. In this strategy, the company charges the same price for every purchase of the same quantity and quality. In addition, market conditions that occur are also the same.
Usually, companies that use this strategy are companies with very large sales and distributions.
The purpose of this strategy is to gain goodwill and make it easier for companies to set prices. However, to implement this strategy, the company must meet the following requirements:
- There is a detailed analysis of the company’s position and cost structure compared to the industry as a whole.
- There is information related to price variability at the same price offered to each consumer.
- There is an understanding of the economies of scale available to the company.
- There is information about competitive prices, namely prices that consumers can pay.
Flexible Pricing Strategy
In contrast to the single strategy, this strategy sets a different price for each customer with the same product quality.
The purpose of this strategy is to maximize long-term profits and provide flexibility by allowing for adjustments, both increases, and decreases in prices.
The price adjustment also depends on the level of competition faced, the relationship between the customer and the company, and the willingness of consumers to pay. As with single prices, to set a flexible pricing strategy there are also conditions that must be met by the company, such as:
- Perform customer-value analysis of the product.
- Have the information needed to implement a flexible pricing strategy. To implement, usually by choosing one method based on the market or geographical location, the product to be offered, timing, or based on technology.
- The emphasis is greater on profit margins than on sales volume.
- Monitoring of competitor relationships, and price changes that have occurred in the past.
This is an explanation of the price flexibility strategy. To make it easier for you to calculate and manage all costs incurred, you can use the help of accounting software such as Journals.…