Hello team, welcome to Frosty Fresh academy. Today's training focus is Pricing Strategies and Revenue Optimization.
There are multiple ways to price a product. Let's delve into four primary strategies and how to gather relevant pricing data. To make it more tangible, let's use our popular "ChiliBlast" chewing gum as an example.
The first strategy is called 'Cost-plus pricing.' For example, if producing a pack of ChillBlast costs us 50 cents and we want a 100% markup, our selling price becomes $1. We collect this data through careful cost accounting, tracking all direct and indirect costs involved in production.
Next, we have 'Competitor-based pricing.' If a key competitor sells their gum for $1.20, we might set ours at $1.10 to gain a competitive edge. To get this data, we conduct regular market research and competitor analysis, keeping an eye on the prices of comparable products in the market.
The third strategy is 'Value-based pricing.' If consumers perceive ChillBlast to offer fresher breath for longer, they may be willing to pay a premium, perhaps $1.30. Surveys, interviews, and customer feedback are essential in gathering this kind of data, helping us understand how much value customers place on our gum.
Finally, 'Dynamic Pricing.' For instance, during summer, when icy refreshments like ChillBlast are more popular, we might raise the price to $1.35. To track seasonal demand and consumer trends, we analyze sales data and market trends over time, adjusting our pricing accordingly.
Each strategy requires specific data and has its unique impact on our revenue. Our job is to decide which is best for any given time, balancing customer demand and profit margins. So when you see a pack of ChillBlast, remember the pricing decisions that goes into determining its price. It’s not just gum—it’s the result of rigorous strategy and analysis. Keep these insights in mind, and until next time, stay fresh, team!