Business Plan Pricing Strategy Example

Business Plan Pricing Strategy Example-42
Ultimately, you’ll want to sell your product or service in as many ways that make sense for your company: online, at a retail outlet, via house parties or mail order, or through other companies.Initially, however, focus on selling through just one of these channels so you can build your business before comfortably extending to others.

Ultimately, you’ll want to sell your product or service in as many ways that make sense for your company: online, at a retail outlet, via house parties or mail order, or through other companies.

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After you document the marketing plan activities, calculate the costs that you expect to incur.

For example, if referrals are part of the strategy, then calculate how much you’re willing to pay a referral partner for each new customer they bring your way. Let’s say, for example, you expect a referral partner to refer 100 clients to you, and each of those referred clients spends $10, giving you a total of $1,000.

The sales and marketing section of your business plan is especially crucial because it determines how you’ll plan on generating profit and describes how you intend to create exposure to best sell your product.

It’s in this area of your business plan that you’ll hone the key elements of your marketing strategy.

The next element of price setting is determining what the demand is for your product and understanding the price elasticity of demand in your market.

If you think about pricing as setting levels of price (for the same product) and if you were able to test those prices (by survey, or a focus group, or even in real markets) you would see that as you priced your product at higher levels, the demand for the product would fall.You can create demand curves (using a spreadsheet analysis) to capture that data.Normally, the higher the price, the lower the demand.If demand does not change much if the price goes up or down (to a certain point), then demand is inelastic.What is the price elasticity of your product in your market?Competitors can slash their prices to meet or beat yours, so be very careful if you decide to compete on cost.This section describes how you intend to get your product to customers and how you’ll measure the effectiveness of those methods.You’re going to need customers to buy your product. There are many free or low-cost strategies such as referrals, word-of-mouth, public relations, and marketing partners to help cross-promote or sell your product, so I would avoid any expensive print, TV or radio advertising campaigns at these early stages. Before you start actually executing on your marketing strategy, however, think about “branding.” This is the look and feel of your business, what customers experience when interacting with it, from the fonts, colors and text of the website and your business cards to the overall image you portray in the product itself.This branding will be reflected in the execution of your marketing strategy.Describe how you want customers to experience your product or service.Take a look at products or companies that you really like, and think about why you like them. Do these characteristics permeate all aspects of the product, from website to packaging to letterhead?


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