The Price, Cost Value Relationship

If I were to ask a room full of 1000 salespeople (I have done it) what is the number one thing consumers want today, what do you think their answer would be? You guessed it - Lower Price. And second? Quality? Right again, and third? Service. Bingo. Now, let's switch scenes for a moment. I now have a thousand consumers or business buyers in my audience, and I ask them the same question. What do you think my answers would be?

Price

Let me give you the most frequent answers I get from this group. 1- Service 2- Quality 3- Lower Price. Well, folks, we seem to have a perceptual difference in what people want and what they tell salespeople they want. How can you account for that difference?

This article is about Price

I believe it is for the following reason. It is a matter of definition.

Price is defined as what we pay for something. We write a check, use cash or a credit card, and our account is debited.

Cost is what we pay for what we have bought over time. In other words, buy a cheap car and you will have bigger service bills and inconvenience. You have a higher cost over time than the lower price you paid.

What do most consumers say they want - in your opinion? Yes, low price. But, what do you think they really want? Yes again, low cost. Therefore, it seems to me, we only need to question prospects better on what they really want and define for them in terms of our product or service the difference. What we are talking about here is value to the customer. And value is always 'perceived' value. Every prospect interprets value in his own terms. Our job in selling is not to always lower the price (when that is often not the real issue), but try to better understand what the perceived value is for each prospect.

The only way to accomplish this is through constant and professional probing questions and then positioning your product or service appropriately in the mind of the prospect.

People don't want cheap. They want value. People don't really want things that rust, break, are inconvenient or difficult to understand. They want life to be easier, less complicated, less stressful, happier and more fun. Show them how your product or service can do all of these, and I guarantee price will never be an issue.

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Acai Berry - How to Lose Weight With Acai Berry

What is Acai Berry?

Price

The acai berry is a fruit of the acai palm tree. It has been harvested by native Americans for hundreds of years, forming a staple of the local diet. However, it became popular in the west only a few years ago when it was publicized in numerous TV shows, newspapers and magazine articles. Why these little berries got so much attention from the media? It turned out that acai berries contain an amazing combination of health-promoting nutrients, among them antioxidants, dietary fiber and monounsaturated fats. No wonder they have taken the world by storm!

This article is about Price

How Acai Berry Helps You Lose Weight?

Acai berries are most known as a weight loss supplement, although they have a number of other benefits such as reducing the aging process and helping cell recovery. The weight loss properties of acai berry can be largely explained by the increased metabolic rate it causes. This happens because of the very large amount of antioxidants (substances, which prevent oxidative stress and cell damage) it contains. This leads to faster fat breakdown, increases energy levels and fights fatigue. Combined, these effects make the process of losing weight faster and easier without any side effects usually associated with synthetic chemicals. Many research papers suggest that eating a diet high in antioxidants is the key to successful weight loss.

How to Choose the Right Acai Berry Supplement?

The following are simple guidelines, which will help you choose the best acai supplement and not fall prey to scams.
Choose products that contain 100% pure Amazonian acai berry extract. Other products are a waste of time and money. Steer clear of products that seem very cheap. Do not forget that acai berries are harvested manually in the Brazilian rainforest, which is a very labor-intensive task. A good price estimate is -50 per bottle and cheaper is not always better. Make sure that the vendor provides money back guarantee. In a few rare cases the product may not work, the money back guarantee makes sure you don't lose money.

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Product Positioning Strategies

Positioning is what the customer believes about your product's value, features, and benefits; it is a comparison to the other available alternatives offered by the competition. These beliefs tend to based on customer experiences and evidence, rather than awareness created by advertising or promotion.

Price

Marketers manage product positioning by focusing their marketing activities on a positioning strategy. Pricing, promotion, channels of distribution, and advertising all are geared to maximize the chosen positioning strategy.

This article is about Price

Generally, there are six basic strategies for product positioning:

1. By attribute or benefit- This is the most frequently used positioning strategy. For a light beer, it might be that it tastes great or that it is less filling. For toothpaste, it might be the mint taste or tartar control.

2. By use or application- The users of Apple computers can design and use graphics more easily than with Windows or UNIX. Apple positions its computers based on how the computer will be used.

3. By user- Facebook is a social networking site used exclusively by college students. Facebook is too cool for MySpace and serves a smaller, more sophisticated cohort. Only college students may participate with their campus e-mail IDs.

4. By product or service class- Margarine competes as an alternative to butter. Margarine is positioned as a lower cost and healthier alternative to butter, while butter provides better taste and wholesome ingredients.

5. By competitor- BMW and Mercedes often compare themselves to each other segmenting the market to just the crème de la crème of the automobile market. Ford and Chevy need not apply.

6. By price or quality- Tiffany and Costco both sell diamonds. Tiffany wants us to believe that their diamonds are of the highest quality, while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices.

Positioning is what the customer believes and not what the provider wants them to believe. Positioning can change due the counter measures taken at the competition. Managing your product positioning requires that you know your customer and that you understand your competition; generally, this is the job of market research not just what the enterpreneur thinks is true.

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How To Set A Selling Price For Your Product Or Service

Fixing the selling price can be based upon a value basis or a cost plus basis with either basis subject to modification according to market conditions. Not exactly scientific and true in all cases but the most profitable businesses tend to be managed by accountants while the best sales growth companies have a sales oriented manager at the helm.

Price

Value basis is used to set selling prices according to the amount the customer will pay for the product and the value of products or services being provided. A strong influence when using a value basis are the benefits a customer will derive from purchasing the product from each business compared with alternative suppliers and the general market rate for that type of product.

This article is about Price

Using a value basis that prices products above the general market level requires support and a marketing strategy to demonstrate to the market place the benefits and advantages a prospective client receives. Pricing a product or service below the accepted market price requires to be supported with ensuring as wide an audience as possible is aware of the bargain prices and the reasons why a lower price is being offered.

To establish the most profitable level at which selling prices should be pitched it is important to conduct market research to determine the general level of pricing within the product area. Also list the benefits and advantages within the context of other competitive products of the specific products being offered to enable the business to use these factors in support of the price structure adopted.

To maximum level at which value basis prices can be set is dependent upon the value the target customer places on that product or service taking into consideration the quality, service, availability and benefits provided.

Cost based pricing is a financial accounting calculation based upon fixing a gross profit margin that the business requires given the expected sales volume and fixed overhead or operating costs to produce a net profit. Normally a sales price set using a cost basis would be the amount paid for the product plus an incremental percentage.

Cost based pricing usually occurs in areas where competition is often working on the same cost basis and by selling similar products and services the volume of sales is sensitive to competitive prices. Market research should establish the range of competitive prices.

There are a number of influences that impact on setting the selling price of a product in addition to the cost and competition. Sales location, added values, buying policy, operational costs and others all require factoring into the calculation. Business size also has an influence as small business accounting is less sophisticated than accounting and financial control in larger businesses.

The tow single most important factors in setting the selling price of a product or service to generate the highest profit margin attainable are the competition and the original cost of the product.

In many cases the existing competition has already set a price for the product. Each business has to decide whether to accept this price according to the expected volume and the gross profit margin generated or charge a higher or lower price with the consequential effect on sales volume.

The purchase price paid drives the competitive edge. Larger business have greater opportunities to buy in larger quantities and obtain cheaper prices and many high volume businesses will search to source products from overseas markets to obtain even cheaper products.

If the purchase price paid by competitors is low then that cost must be either matched by adopting similar business practises or the products sold into a niche area of the market where more flexible prices can be obtained at the required volume to generate the gross margin required to cover fixed operating costs and achieve the target net profit.

Different prices can be set for different customers to exploit higher profit margins where possible and achieve higher volumes in market conditions where the price has a major influence on quantities bought. A manufacturer will often set different prices for each customer dependent on volumes purchased and the negotiation skills of the client purchasing function.

Market conditions often determine a range of pricing policies including offering quantity discounts for higher volumes, cash discounts for faster settlement, lower than normal prices to allow a market to be penetrated and established more easily and higher than normal prices in situations where supply may exceed demand. The accounting software or bookkeeping system employed should identify gains and losses due to different pricing structures.

The levels of supply and demand may change over time and a flexible pricing policy to take advantage of these changes is desirable. It is an economic fact that when demand exceeds supply prices will increase and when supply exceeds demand prices go lower. Failure to react quickly has a major impact on the total gross margin attained.

The overriding decision to be taken on setting selling prices is the amount of gross profit generated by the sales volume of those products in relation to current business policy and fixed operating costs and profit requirements that business needs to achieve and demonstrate through the accounting figures produced by the final bookkeeping reckoning.

From an accounting point of view the sales volume and price of each product should be calculated to determine the previous gross profit margin attained and planned for the future. The actual or forecast gross profit margins must cover the fixed operating costs of the business or remedial action taken to ensure the business is profitable. Setting prices is a combined decision of the sales and accounting function.

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