Market price – Effects on Business sales turnover

Market price of commodities is usually the major determinant factor of the sales turnover in the period of time. It is therefore very important to be very considerate in fixing selling price of your products. Price of products is used as a ground for competition in the sales industry, it change market share or create different revenue scenarios. Understanding how pricing affects sales turnover is very critical in maximizing periodic revenue.

5Factors that might affect market price

Markup margins

Market price markup margin in commodity price can be defined as the difference between the cost price of products and the selling price. Understanding the technique of markup in sales industry is very important. In determining markup up margin, various factors have to be putting into consideration. Such as: The unit overhead of the products, the shelve life span of the product, competitors, the brand, the source of the products and other necessary factors.

Effect of price on sales

One of the most obvious effects of wrong or right market price is the decrease or increase of sales. Economist studying of price elasticity or the response of consumer purchasing to a price change show that, the increasing in price of commodities might slightly lower sales volume, helping you to make up for decreased volume with higher total profits generated by higher margins. Lowering your prices can increase your profits if your sales jump significantly, decreasing your overhead expense per unit. Test the market’s response to price increases by changing prices in targeted areas before instituting an across-the-board price increase.

Price as business image

Price of commodity can project the image of the company or the individual products to the public or the customers. This affects the brand, image or position of the commodity in the marketplace. Market price can be perceived in either way, it could be negative and disadvantage to the sales, or it can as well be of advantage to the business. For instance, higher price may present the products as high quality products, while low price could be of benefits to those that prefer to buy more pay less. Offering sales discounts, rebates, compensation and closeouts sales can be of immense benefit to both seller and customer.

Market share and competition

Market price gives room to be more competitive in the marketplace, affecting your share of the market’s volume. Some time it is possible to sell at lower price temporarily to gain market share from competitors, who can’t respond to and meet a price decrease. After consumers have had time to try your product and develop a brand preference or loyalty, you can as well effect reasonable changes to the price.

Predatory market price

Predatory pricing is a pricing strategy, using the method undercutting in a larger scale, a situation price will be deliberately reduced to a loss-making for a short term, with the sole aims of taking market share away from a competitor or closing down their business, due to their unable to compete the ridiculous price regime, with the mindset of dominating the market. Predatory pricing usually will cause consumer harm and is considered anti-competitive in many jurisdictions making the practice illegal under some competitions.

Market price of product plays a very crucial and the vital roles in the market place, hence we approach pricing with great care and every sense of responsibility.

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