Is the price right? Pricing for long term profitability

Andrea Erika NyArAdi
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Andrea Erika NyArAdi: Budapest University of Technology and Economics, Budapest, Hungary

Management and Marketing Journal, 2007, vol. 5, issue 1, 177-184

Abstract: The way how we choose our pricing strategy has a significant impact on company’s success. Nowadays companies more and more adopt a new way of thinking in pricing, namely pricing for a long term period in order to bring higher profitability, to build an efficient pricing strategy. Marketers have only recently begun to focus seriously on effective pricing. These companies are the so called progressive companies. They have begun doing more than just worrying about pricing. To increase profitability many are abandoning traditional reactive pricing procedures in favor of proactive pricing, making explicit corporate decisions to change their focus to growth in top-line sales to growth in profitability. The long-term implications of price strategies are still under-researched, and managers should be aware of shifts in customer reactions that may result from frequent adoption of certain strategies. The company pricing strategy should be seen in relation to developments in the company variables, internal ones (capital strength, competencies, organizational conditions, efficiency of the work force etc.) as well as external ones (customers, competitors, the technological development etc.), adopting strategic pricing. In this paper I will present the most effective pricing strategies leading to long term profitability, and also suggest practical conditions for pricing strategies to maximize profit in the long run.

Keywords: knowledge management; human resources management (search for similar items in EconPapers)
JEL-codes: M31 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:aio:manmar:v:5:y:2007:i:1:p:177-184

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