The Stasticity Of Costricing Approach By Eco Shack

The importance of Cost plus pricing approach is if in future the company come up with some other new diverse product, with this approach they can easily decide the fair price, because of the ease to calculate than what is provided with others approach. With information about the product design when the selling price has been determined, products and costs is possible and easily to be decided. This means that the reality of the market price is calculated as an approach to be considered while the point of view of the buyer in terms of what he wants and what it will pay.

Its disadvantages are:

This method overlooks the concept of price elasticity of demand, it is possible for businesses to set the higher price (or lower) to maximize profits depending on customer response to change in price of their product. With this method there in only a little ways to cut down or control their production costs, let say if the resources cost increases, the selling price will be increases too. There is a lack of efficiency and lack of competitiveness compared to another competitor' prices.

Alternative approach for Eco-Shack

One of the alternative approach that Eco-Shack can choose is value based pricing. Value based pricing sets the price according to the perceived value to the customer. By choosing this approach, a company will have to do market research to determine the price, market research is important to avoid setting the price too high that makes customer reluctant to buy it or too cheap that may lead to a loss or low profit.

Eco-Shack can use this approach very efficiently as Eco-Shack offers a different product that is ecological environmental friendly, with good quality, lots of features and customizable that is different from the other...

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...k, Twitter etc. can play a vital role in spreading how the product delivers against the rising environment issues.

Pricing method that Eco-Shack is currently using is cost based pricing, this method is good for the company because it is easy to count, and will less likely to occur mistake. Nevertheless by using this pricing approach Eco-Shack will be struggle to maximize their profit, and this method is less competitive that can affect the company sales performance.

Another thing that takes into account for a product success is positioning, how the customer think of the products. A good positioning strategy will not just make the customer knows about the product but will also appeal and attract more customers. An alternative pricing approach need to be prepared if the customer doesn’t like on the pricing of the product or the company want to increase their profit.