Usually of you have a product to be sold, it is easy to decide the pricing of the product based on initial factors. If you are aware of manufacturing cost, transport cost, warehouse cost, etc. you can easily decide the final cost based on your profit margin you add. However, when you are offering a service, it is difficult to get tangible factors to decide the price of the service. This is especially try in terms of Financial Services. Whenever you price a service, you have to keep in mind the customer’s willingness to pay, market rates, profit margin, etc. Here we will look into the details of pricing financial services.
Pricing of financial services depend on a number of factors. Here we will take an example of financial saving service. Initially you have to invest in the physical appearance of your workplace. When a customer enters your office, your office should reflect sincerity, trust, genuine vibes in first impression itself. When a customer is coming to you with their lifetime saving, you should build enough trust with them. Here we come to know that, the capital invested in Commercial real estate will decide a part of pricing of your financial service.
Ease of accessibility
Your office should be close enough to populated areas. Nobody likes to drive miles just to deposit or withdraw minimal amount of money. No doubt that your office should be in populated area, but you have to aware of security also. Here we learn that pricing of your service will depend on which area you are working from. How secure is the area? If you live in urban city and in the business hub, you might have to pay more the real estate as compared to urban areas. Here you have to do a feasibility study as to whether the cost of real estate in urban areas justify the income you will gain in your business.
Your pricing should be defined based on the customer base you are going to cater too. For an instance, if you have a low earning middle class customer, he would have a very low disposable income with him at any point of time. Hence he might not carry out huge transactions but will have small withdrawals and deposits in his bank account. While someone who is working in corporate environment will have monthly cheques which will be deposited in the account. They might have huge transaction value but the frequency will be less. So according to the customer base you have to decide whether you will be charging according to the multiple transaction of smaller values or the pricing will be based on single huge transactions.
Mostly customers compare multiple institutions in terms of financial services. They look for institutions which provide higher interest rate, which have good credibility and trust factor and the ones who seem to be in the market for long term.
Standard microfinance is in move from an item headed to a more focused, business sector approach. The more client responsive business sector drove methodology is portrayed by more aggressive markets and an emphasis on productivity, item broadening and conveyance channel advancement, each of which have suggestions at setting and conveying costs.
This theory uses the logic of pricing a particular product on the basis of marketing function. You have to do thorough research with competitors to establish a price range which is affordable for all the stakeholders, mainly the customers and business owners. You get this research from marketing training and marketing manuals. Definitely, where interest for budgetary services is value oriented, a lower value prompts a critical increase in popularity. Nonetheless, where interest is more prominent than supply, as in most microfinance markets, cost is not the withholding component. Neither for some microfinance foundations subject to achieving an expressed level of return, is benefit expansion a key driver.
Pricing and Consumer Behavior
Price evaluation impacts the client conduct, for instance, an unequivocal exchange charge will decrease the quantity of withdrawals made, is of relative advantage to clients with a low volume of exchanges, and is straightforward. Interestingly an altered expense, gives conviction of expenses, however effectively gives a sponsorship to customers with a high volume of exchanges.
Using Price as a Differentiator
Market drove answers for monetary services utilizing Price as a Differentiator cost to separate an establishment from its opposition can be risky. A basic perceptual map, given beneath recommends that there are no less than three critical differentiators, to be specific value, quality items and a helpful administration environment. In any case, to contend on cost alone, implies working on low edges and being prisoner to other establishments having the capacity to offer administrations all the more productively and having the capacity to out contend on cost.