Many new companies use this technique to draw attention away from their competition. Penetration strategies aim to attract buyers by offering lower prices on goods and services. Thus, Sony skimmed huge amounts of revenue as a result of an early adopter of the technology. This by the year 2001 reduced to about $2,000 for a 40 inch HDTV set. Hence, by the year 1993, a 28 inch HDTV costed just over $6,000. This was done in order to lure more customers. However, over the next few years, Sony reduced the prices of these HDTV sets. These customers were the ones who desperately wanted this new technology. These television sets were bought by customers who could afford to pay such a high price. Its HDTV set costed $43,000 when it introduced them into the Japanese market in the year 1990. It also creates an illusion of quality and exclusivity when your item is first introduced to the marketplace. Not only does price skimming help your small business recoup its development costs. You then drop the prices eventually to attract more price-sensitive consumers. One of the benefits of price skimming is that it allows you to maximize profits on early adopters. This is done eventually as competitor goods appear on the market. Once the products or services are introduced, company lowers the prices gradually. This is designed to help businesses maximize sales on new products and services. Price skimming involves setting rates high during the introductory phase. Here are some of the strategies businesses implement when setting prices for their products and services. These include the product itself, the place where it is sold and its promotion. This is in addition to other factors that impact your business. Thus, product or service price can have a profound effect on the success of your small business. This is because low prices will not allow you to cover all of the business’ costs. On the other hand, your company won’t succeed if it prices goods too low. Your customers won’t purchase goods that are priced too high. You need to consider a wide range of factors when setting prices of your offerings. One of the most important is the pricing strategy utilized by you as an owner.Ī right pricing strategy helps you determine the price point at which you can maximize profits on sales of your product or service. There are various factors that affect a small business’ revenue potential. The operation and revenues of SMEs contribute a great deal towards economy as a whole.
It’s no secret that small businesses play a vital role in the Indian economy.
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