Topic 7 Activity: Understanding Pricing Decisions, UK

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Category	Assignment	Subject	Business
University		Module Title	Topic 7 Activity: Understanding Pricing Decisions

Setting the Right Price for Your Product

Step 1: Key Factors Affecting Pricing

Guiding Questions:

1. What is the cost of your product or service?
2. What unique value does your product/service offer to consumers?
3. How does your product position itself in the market compared to competitors?

Factor	Example	Explanation
Costs	It costs £10 to make each bottle.	The price must cover costs and generate profit.
Competitors	A competitor sells a similar bottle for £15.	Set a competitive price reflecting your product's value.
Customer Perceived Value	Eco-friendly products are worth more.	Highlight sustainability to justify a higher price.
Value Proposition	Durable and reusable bottles.	Customers see durability and eco-friendliness as premium.

Step 2: Compare Prices with Competitors

Guiding Questions:
• What are competitors charging for similar products?
• How does your pricing compare in terms of value and market positioning?

Competitor Name	Product Description	Price
Competitor 1	Plastic water bottle	£5
Competitor 2	Stylish eco-friendly bottle	£20
Your Product	Stainless steel water bottle	Your price: £[Enter]

Step 3: Choose Your Pricing Strategy

Guiding Questions:
1. Which pricing strategy best suits your product and target consumers?
2. How does your strategy align with your value proposition?

Pricing Strategy	Example (For Guidance)
Cost-Plus Pricing	Add 50% to your cost (£10 + 50% = £15).
Value-Based Pricing	Charge £20 based on customer willingness to pay for eco-friendliness.
Bundle Pricing	Sell a set of bottles for a discounted total price (e.g., £50 for 3 bottles).
Freemium Strategy	Offer free customization and charge for premium designs.

Note: Avoid relying solely on discount pricing. Highlight your product's unique value and justify your price accordingly.

Step 4: Think About Your Target Market

Guiding Questions:
1. Who are your target consumers?
2. What price range fits their budget and expectations?
3. How does your pricing align with their values and purchasing behavior?

Target Market	Price Range	Why It Fits
Eco-conscious adults	£15–£20	Aligns with their willingness to pay for sustainability.
Young professionals	£10–£15	Balances affordability and perceived product value.
Families	£25–£30 for bundles	Encourages bulk purchases for multi-use products.

Step 5: Reflection for Presentation

Guiding Questions:
1. How did you decide your price?
Example: "Based on costs, competitor analysis, and customer value perception."

2. Why will your price work for your customers?
Example: "Our price reflects eco-friendliness and fits our target market's expectations."

3. How does your price show value?
Example: "It highlights durability, sustainability, and affordability for the target audience."

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