Price elasticity and pricing
Price is one of the most important factors affecting the efficiency, volume and profitability of the company’s sales. Based on the latest methodologies, we conduct a comprehensive analysis of the effectiveness of the pricing policy of companies in each industry. Throughout the whole process, we arrange prices, rebates and their thresholds in such a way that your company can build a market advantage and strengthen its position without at the same time giving up the generation of stable profits. In this and other areas, Assay Consulting always has an individual approach, tailored to each client and the industry in which it operates.
A well-chosen pricing model is an effective tool for building a competitive advantage. The essence of an adequate pricing policy is the precise balancing of the prices of offered products with the planned sales volume. The aim of this action is to maximize the mass of the margin, i.e. the amount of money that the product or product line brings to the company. The pricing policy that goes well in the chosen market becomes a contribution to increased profits, allowing reinvesting of funds and faster building of market shares.
To develop a pricing model that is good for your company, it is necessary to conduct a thorough analysis of the scope of price elasticity. When conducting a project for your company, we have to answer a series of difficult, but very much needed questions such as:
- How would the price increase by 10% affect the sales results in volume and value?
- Will lowering the price by 0.2 PLN on a piece generate a mass of margin increasing our profit?
- How high is the price elasticity of our products? How does the behavior of our competition affect it?
- Is the company’s rebate policy correct for all products, categories and client groups?
The answers to these and other questions are aimed at bringing you to the right conclusions in terms of pricing policy. Well-organized pricing is the basis for building a competitive advantage – in any industry in which your product or service has any substitutes or products similar to those produced by your company.
Price elasticity and pricing
What is price elasticity?
Price elasticity is the ratio of change in demand to price change. In practice, this means that the study of price elasticity gives an answer to the question about the change in the sales volume in relation to the price increase or reduction, thus defining the optimal price for maximizing the company's profit.
What is pricing?
Pricing is the pricing policy of the company. This is a strategy element that defines the price levels of the products and their groups. The pricing strategy is next to marketing one of the most important factors defining the market success of a product or service.
How much does the price optimization project cost and last?
Each pricing project is priced individually. The time frame depends on similar factors such as the number of products covered by the project, the size of the enterprise or the level of complexity and development of the market on which the company operates.