Pricing Strategy of Goods and Services - Free Essay

Introduction

For an entrepreneur to set prices for their products, one has to be intelligent because if an entrepreneur sets their prices too high, they may slip up on precious sales although if they set the prices too low, they may fail to get valuable income. The key detail on pricing is not for a business owner to speculate on the price of a product but to utilize pricing models to better understand the market by setting the right prices and still attaining set objectives (Zhang, 2016). The term price can thus be defined as a set value on a product or service, and this is due to market research, complex smart calculations, and understanding the risk, whereas ‘pricing strategy’ is taking into consideration payment ability, market situations, segments, trade limits, effort costs and action by competitors. The key purpose of this essay is to analyze a firm's goals in price setting and its constraints plus reviewing ways to create an “estimated price level” utilizing cost, demand, competition, and profit-intensive methods.

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Washburn Guitars

With pricing strategies, a company like "Washburn Guitars" should adopt the best pricing for their products to ensure high revenue and profits plus having the necessary information about your competitors' prices. Washburn Guitars was established earlier than the Civil War created by Patrick Healy and George Washburn in Chicago; stringed instruments have been their vocation since 1883. The institution has made banjos, guitars, ukuleles, and mandolins. Regardless of the genre of the era, the biggest names in music have played with these instruments from Washburn (Kushner, 2019). Their legacy of almost one hundred and 150 years has ranged in producing instruments for various musical legends, including Bon Jovi, Bob Dylan, and Dolly Parton. The brand assures consumers that in Washburn, one may find a musical partner, finding an instrument that is exceptionally valuable to the customer and that their instruments are of high quality made from hand-crafting by the best in the business.

Price Constraints

The pricing objectives often mirror organization goals, while pricing constraints often relate to conditions seen in the market. In contrast, Washburn guitars are mainly produced in South Asia to reduce the cost of manufacture to have cheap prices further. Furthermore, the company's prices are to ensure an increase in profits and the control of the market share by increasing unit sales (Kienzler, 2017). Price constraints restrict the organization's ability to control its products; such limits include the products' quality, ethical or legal issues, prices from competitors' production output, and quality plus the product's durability. Washburn Guitars may adapt break-even analysis, which may aid them with a better understanding of pricing strategies. Experts have often defined 'profit' as "ROI" (Return Of Investment) or ROA (Return Of Assets ). According to experts, " The global market for a guitar is CAGR of three percent between 2020-2024 conferring market study". Washburn Guitars provides a variety of prices for guitars, but it should stress on other instruments.

Recommendations

In order for Washburn to enjoy unlimited revenue, they should utilize all four approaches of pricing strategies that aid them in establishing the best pricing for the instruments. They should concentrate on a demand-oriented strategy because numerous competitive brands sell guitars; a recent poll ranked the corporation sixth in guitar selling. Washburn should build custom guitars for customers who would like to purchase replica guitars of famous musicians and ramp up the instrument's number of sales.

References

Kienzler, M., & Kowalkowski, C. (2017). Pricing strategy: A review of 22 years of marketing research. Journal of Business Research, 78, 101-110. Retrieved from https://www.sciencedirect.com/science/article/pii/S0148296317301510

Kushner, R. (2019). The building, Leading, and Sustaining a Cultural Enterprise: Martin Guitar in 2019 [FULL TEXT]. Retrieved from http://sal.muhlenberg.edu:8080/librarydspace/bitstream/10718/3259/1/kushner_martin_2019.pdf

Zhang, Z., Nan, G., Li, M., & Tan, Y. (2016). Duopoly pricing strategy for information products with premium service: Free product or bundling?. Journal of Management Information Systems, 33(1), 260-295. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/07421222.2016.1172457