Final answer:
The current pricing strategy for the mobile application is not effective due to its lack of consideration for costs and target market. The updated pricing strategy is a tiered pricing model based on the level of tutoring needed, which allows for more tailored pricing. A markup of 30% was chosen to cover costs while remaining competitive.
Step-by-step explanation:
The product I have chosen is a mobile application that offers online tutoring services. The current pricing strategy for this product is a monthly subscription fee of $50. However, this pricing strategy is not effective because it does not consider the costs associated with the product and does not align with the target market.
To assess the target market, we conducted market research and gathered data on the demographics, preferences, and purchasing behavior of potential customers. Based on this information, we identified the target market as high school and college students who need academic assistance.
The pricing strategy we have identified is a tiered pricing model based on the level of tutoring needed. For example, basic tutoring services would be offered at a lower price point, while more advanced tutoring services would be priced higher.
The benefits of this updated pricing strategy are that it allows for a more tailored approach to pricing, ensuring that students can access the services they need at a price point that is fair and reasonable. Additionally, this strategy takes into account the costs associated with providing the tutoring services, such as hiring qualified tutors and maintaining the technology infrastructure.
We chose a markup of 30% for our product/service. This markup was selected after considering the costs associated with the product, including tutor salaries, technology expenses, marketing, and administrative costs. The 30% markup allows us to cover these costs while still providing a competitive and affordable pricing option for our target market.