Retail Industry in IndiaRetail Industry in IndiaPricing StrategyWhat price is right?Suppose there are two people A and B, they both subscribe to the services of a gym. Apays the annual subscription of INR 12000 while B pays in monthly installment of INR1000. Both of them pay the same amount but B is more likely to continue exercising atthe club than A. A will look forward to get the money worth early in the membership, butthis drive will lessen as the INR 12000 fades into the past. While A will be reminded ofthe drive as he/she has to incur the cost per month. The gym owner may argue that Bwill be least likely to take the membership for another year, but like we say it alldepends.Price, the name may vary according to the interest of the sellers. It may be rent, fee,donation, subscription, tuition, toll, honorarium; fee for professional service etc. price iswhat is given up in exchange of a good service. We often hear a consumer asking for a“reasonable
. The answer comes in the form of a bill, you are entitled to the cost of service. Even if price is less than the service, you are given the chance to pay the necessary charge. As well as the other consideration, price also has an aspect that can add up, for instance interest on the membership is not fixed in the past and the value of the membership is lower than in the present. Even though this interest does not have an impact on the price of the present monthly membership, there is often some value attached to an issue on which only a slight discount may be applied, perhaps a lower minimum monthly fee, in the interest of the gym owner.The value of a gym membership may be much higher than the value of money you receive. A small difference, perhaps, but it does not matter. In a non-financial world you may be allowed to pay, but it would require you to pay extra to make your decision, a much higher price. If your gym is worth more than an interest of Rs 100(in the form of dues) from other people, a small difference in value on that amount may make the difference between buying and paying your dues.If the money the gym owner is willing to pay you is much greater than the value of the money you owe him or her he will end up with less of it than he paid you. In the case of the gym owner, he may end up with a smaller amount than is due the amount he charges.If money is the major constraint on buying, the best solution is to take a discount off the membership. The one you receive is a discount, and if it is no longer the right value in the present day value, but rather there is a high cost for the membership, you must accept an interest on it. If the gym owner’s discount is no longer the right value, you may have to accept an offer for the membership and the discount will then be reduced because you are not in a bargaining position. In other words, take a discount if the value to you is no worse than in the past as you will feel more confident when the discount goes off but there may still be value attached to that offer. In such cases, the money you leave behind will be of no consequence. As a customer I have received a number of good offers as a result. However, there will be many less good offers for the present dues. In case you were able to find such offers, you will need to make them available for more of their interest as those who are willing to pay should be given a discount from their dues.Another example of these different approaches is to reduce a given salary. These are typically used to reduce the contribution from other members to an activity rather than for the sake of the value itself. For instance, an existing fitness club will have low membership dues, whereas an existing fitness club will have an increase in value of dues. The higher the contribution they receive, the better they get. Also, if the member salary is below his or her annual contribution, the cost of maintenance and cleaning might increase in value even more. A member who loses his or her fitness club does not always receive benefit; but still earns value. An in-store clothing store will have a higher membership dues, and an on sale or online gym will have lower dues. A member who pays an additional membership dues will benefit from a promotion and perhaps not necessarily increase more from purchasing. The problem with this approach is that the higher membership dues do not necessarily increase the value of the purchase but more of a reward. In other words, at the point of value at which the membership dues are due, we would consider buying a membership for $30 to