As a type of entrepreneurial activity, trade is the resale of goods. Trade organizations, not being producers of products, act as intermediate links between manufacturers and potential and real buyers.
At the same time, pricing in trade is based primarily on the principle of profit. Since the main source of profit is a well-formed price, it is in the trading sector and plays one of the most important roles in the entire process of economic activity.
Therefore, pricing in trade is one of the priority activities of specialists whose competence is in the sphere of ensuring the interests of the company and its strategic development.
Pricing in trade is based on such concepts as structure, price composition , prices for a similar product, price index, distribution costs, competitor prices, profit margin and others.
The pricing mechanism provides for various patterns, pricing methods and pricing principles (validity, price unity, continuity, control, focus).
To establish prices for goods, a trade organization must take into account a whole range of factors that can influence the price and its level.
The pricing mechanism is based on the principles and methods by which prices are formed. They are mediated by the pricing policy inherent in a particular company, which is expressed in methods of price management and psychological methods of creating adequate price indicators.
The methods of price management include discount systems, bonuses, savings systems, promotions, gifts, discount cards , etc. Psychological techniques are based on the properties of human nature and the knowledge that people often tend to make irrational purchases.
Pricing in trade is mediated by a number of factors. First of all, it depends on the market niche occupied by the company. This may be a niche market for perfect competition or the so-called monopolistic market. In the first case, sellers have practically no effect on prices, so the trading company needs to set prices approximately equal to the prices of competitors. In a monopolistic market, the price is almost entirely determined by the monopolist organization.
In addition, it is very important to take into account the general market situation and all the time fluctuations inherent in it in the process of pricing. In a situation of stable demand in the market, the passive pricing mechanism can be successfully applied. Its essence boils down to a strict adherence to costly pricing methods without taking into account consumer preferences and market changes. In a situation of a growing market, it is necessary to take into account the mood of consumers. In these conditions, you need to turn to active pricing, adapting to customers and responding mobile to market changes. Such a mechanism is characteristic of exchange trading and similar areas that are subject to lively changes in market conditions.
The formation of prices is also affected by the stage of the life cycle of the goods sold. For new products, prices are set for intelligence. With more stable demand, the price reaches a correspondingly higher level. And in conditions of market saturation, prices have to be lowered.
The stages of pricing include several items. The first is the selection of pricing policy objectives (ensuring survival, market retention, or maximizing profits). Then analyzed the level of demand for the goods. Only after this can we proceed to the accounting and analysis of our own costs and the study of competitors' prices. The next stage in pricing is the choice of the method of pricing and the transition to the appointment of optimal prices for goods sold.