What is price optimization?

Price optimization is nothing but the process of determining the correct retail value of a consumer product or service. Although in principle, it may seem that there are not much to consider both manufacturers and retail stores spend a huge amount of time to optimize prices to ensure that their products are selling quickly while still profit. If the item is too high, it may not be sold at all, while if the costs are too reduced, the store will unnecessarily reduce its purchasing power. Each manufacturer uses a formula of price optimization based on total demand for their product, competition level and costs for the production of their goods. Although each of these brands can be comparable in terms of overall quality, manufacturers determine prices based on their image with consumers. Several canned tomatoes on the Onalve supermarket can be 20 to 30% more than general brands, while the value brands are constantly falling their prices to remain the least expensive brand in place. FindingThe perfect balance between profit and value is basically what to optimize prices, and because the relative values ​​of goods and services are constantly changing, this is an endless task for most businesses.

It is not impossible to obtain the right price optimization without evaluating all three aspects of the formula, because in any geographical area the standards may vary completely for other places where the product is sold. For example, if the consumer calls a repairer on a working day, the price cited would be much lower than if the same services were required at a weekend or holiday. Trades without a lot of competition can also adjust their prices optimization, while franchises in large cities must normally set their prices much lower to attract customers to enter their shop windows.

Another important aspect of price optimization would be the total volume of SALE KONKRiet business. While many special stores will have only a few high profit sales a week, others will try to complete thousands of transactions to generate revenue. If a certain prices optimization point cannot attract consumers to the purchase of a product, retailers may be tempted to drastically reduce the amount of sales to sell many of these items quickly. On the other hand, when consumers are naturally attracted to the product and it is desired, businesses maintain the price high to achieve as much profit as possible. In both philosophies of sales, merit and the consumer will eventually decide what point optimization of prices is considered to be fair.