The objective of setting a desired pricing level for a product or service is to provide a benchmark against which actual pricing performance can be measured. This benchmark allows businesses to assess profitability, market competitiveness, and the overall financial health of their offerings. For instance, a software company might aim for a specific average revenue per user (ARPU), allowing them to track performance and adjust strategies if necessary.
Creating this financial objective is crucial for several reasons. It provides a clear financial goal, aiding in strategic planning and resource allocation. It facilitates performance evaluation by offering a measurable target. Furthermore, a well-defined pricing goal allows for informed adjustments to pricing strategies in response to market dynamics and competitive pressures. Historically, setting such financial objectives has evolved alongside business practices, moving from simpler cost-plus models to more sophisticated value-based pricing approaches.
