Right Pricing: Imperative For Smes To Stay Competitive

In the current competitive market, offering world-class products and services is not enough

. One needs to pay equal attention to pricing of the offerings. Setting the right price on products and services can work wonders for SMEs in India since it is this factor that to a large extent determines a companys profitability in the market space and has a huge influence on the competitiveness of a firm.

Need for pricing strategy

Adopting an appropriate pricing policy and fine tuning it according to the dynamic market conditions is a difficult but crucial task for every business house. Using the pricing policy can help SMEs bag prestigious orders anddeals and retain a strong position in the competitive global business environment.

SMEs are often seen losing out valuable negotiation and sales deals to their competitors due to rigid pricing policy and ineffective strategy. Therefore, it is necessary for small businesses to base their pricing structure after conducting proper analysis of market conditions, in-depth research about the industry as well as competitors in their respective fields, says H. Ajmera, proprietor of Marble Kingdom, a small-sized marble supplier and exporting unit in Chennai.

Value-based pricing policy is vital for SMEs as regards strategic branding of goods and services. It is also important to judge the value that a product carries and the benefits it provides to clients before deciding on a price.

Pricing structure must take into consideration the fact that the rates for products and services must be in harmony with its value. If we are selling a product on the basis of quality, we also need to deliver value to retain customers in order to get business in future, says M. Jajoo, proprietor of India Plastics Products, a small-sized plastic manufacturing unit in Kolkata.

A systematic and value-based approach in formulating a pricing structure as well as regular re-assessment of the companys pricing strategy according to changing economic tailwinds can help SMEs to maintain a successful run even in adverse economic circumstances.

by: David Parks

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