Painting is a job that requires a real flare for creativity and cannot be done by everyone, but only by some people with unique talent. If we want toapply this to the products that our painter will be producing, we will have to look at the various underlying factors. Since, we know that paintings or artwork requires very minimal cost. It requires only the cost of paper and cost of paints. However, the real cost that is taken into account for artworks is the cost of effort and flare for doing such things.
The pricing strategy that could be used in this case will be value-based pricing. Artworks are unique items which differ from artist to artist and hence if customers want to buy an artwork of a particular painter, they will have to buy only from that particular artist. Artworks are made up of paints and paper and thus do not have any value for their tangible features. As discussed above the real price is charged for the effort of the painter and his creativity. It is these efforts by the painter that gives value to the painting and artwork.
In the light of above discussion, we can conclude that pricing policy that we will use here will be target pricing. In this approach we will perceive the value of our artwork through various marketing techniques such as test marketing or auctions and then we will price it in line with the value that consumer place on the product. This will enable us to yield the maximum price that our artwork can squeeze and hence this will maximize the revenue. However, apart from value based pricing, another pricing strategy we will use will be prestige pricing.
The items that will fall under this category will be exclusive items. These exclusive items will be available to VIP people. These will be limited collector’s items and we will keep them short in supply. This will be done by keeping price higher than regular products. For example, if a regular product is worth, let’s say $700, then the collector item will be worth $1400 - $2000. This will be a luxury item by our brand and hence we will be targeting some very rich customers.
This type of pricing policy will be used only after our artist gets popularity and he gets acknowledgement of the society. Before that in order to promote our painting we can offer bundle pricing in which we can give discount to customers who buy more than one painting or more than one item from our art catalogue. Similarly, after our artist becomes popular we can use value-based pricing and can allow demand and supply analysis to make minor adjustments in the prices. After a certain time, when our business gets established we can use target profit pricing in which we will determine the profit that we want to earn each month and based on demand we will charge the price which will earn us that much profit.
This will keep us earning a certain amount of profit that will keep us earning predetermine profits. The target profit pricing will take into account the costs associated with the artwork such as rent, heating and lightning cost and painter’s allowance. Keeping that in mind along with how much paintings our writers can produce, we will price the products in a way that they yield us a certain amount of profit at minimum.
This will enable us to cover all the costs and keep earning a predetermined amount of necessary profit that will keep us working. However, we will have to keep in mind that there are certain occasions where we will have to fluctuate the prices according to the external factors. For example, we can use promotional pricing during festivals like Christmas.
This is the season when people are willing to spend and by doing this we can increase our demand and can generate a lot of additional revenue. Similarly, one alteration to prestige pricing that we can use is that after certain times, unsold VIP paintings, will be sold at a price of regular paintings. However, in order to justify the high prices that people will pay for luxury items, we will make few more copy of that item; they will be demoted from collector’s item to regular items. This will be our pricing policy for the new painting business that we plan to setup with the recently graduated painter. Work Cited Phillip Kotler and Gary Armstrong.
(2005). Principles of Marketing. Prentice Hall