How does your company’s pricing affect its long term success?
Pricing strategies have an important role in determining long term competitive success. Prices must be high enough to recover all costs and make a profit and at the same time be low enough to be considered fair and so that products and services are considered by the customer to be worth the price paid.
However, there are other considerations. A company providing a niche product or service which has high prices to reflect their uniqueness can price so high that competitors enter the market with similar products or services. In this case, a somewhat lower price might discourage competitors and be a better strategy for long term success. There are many other situations and considerations to be evaluated in determining the best long term pricing strategy.