Haircuts the Price of a Commodity or Essay

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Total Length: 1292 words ( 4 double-spaced pages)

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Haircuts

The price of a commodity or service is determined by evaluating how value is fashioned with regards to the customer segments in the market. The management of the organization needs to ensure that the pricing of the product is optimum to guarantee sufficient number of customers thus generate adequate profit. Strategic pricing is one of the elements of marketing mix that a producer needs focus. Product pricing is related to product positioning as different customers may be willing to pay different prices for the same product. Pricing strategy also affect the channels selected by the producer to penetrate the market, and the promotion strategy to be used to create awareness in the competitive market.

Pride determination has no specific formula although several factors need to be considered so as to formulate at a favorable price. One such factor is developing a marketing strategy that will evaluate segmentation, target market and positioning of the brand in the market. The producer needs also to consider the market mix decision where tactics such as product, distribution and product need to be defined. The producer also needs to evaluate the demand by formulating a demand curve for the product. This will enable the producer to determine what price to sell to the market (Pride, Hughes, & Kapoor, 2012).

The fixed cost and variable cost should be included in price determination to enable the business to make a profit. The producer should study the environmental factors affecting the product and use them to come up with an optimum price for the product. Every business should have a pricing objective to use when determining the price of its commodities. A pricing objective can be revenue, profit maximization of price stabilization. The business can use the mentioned steps to ensure a pricing method that will attract many customers and maximize the profit generated by the product.

Pricing structure

A common mistake made when pricing products is setting prices for products and not the customer segment.

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The managers have also used various models to come up with pricing formulas such as choice modeling which has enabled the managers to determine the prices of products. These models evaluate the willingness to pay a certain amount of money for the product. This methods used have however been unable to determine the actual value of a commodity. This has led to the need to understand the client's needs as a way of finding out the value of the product. Understanding the needs of the customers can be to design the features of the product such that they benefit the customers which can be for price determination (Nagle & Holden, 2002).

Haircut business

The proprietor of a haircut business needs to ensure that the pricing of the product is set at an optimal price. Pricing product highly would ensure that the business addresses the needs of the upper end of the market which has few customers willing to pay high prices for the product. The shortfall of this pricing strategy would be that the profit levels would be low. Pricing the product at a low price would attract customers but due to the costs to the business the level of profit would remain low. The need to ensure a price for all products address various segments in the market need to be addressed to ensure that the business can cover its operational cost and make a profit. To ensure that a product is priced optimally, pricing structures that are aligned with value received and not the product delivered may be used by the pricing manager. Pricing metrics and fences are the techniques used to make such pricing structures. The term pricing metric refers to the unit by which price is applied to the commodity.

A haircut business can be operated alone or in a salon that serves both male ad female clients. Price metrics can be used….....

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