Assessing the pricing methods used by small and medium-sized enterprises in the Cape Coast metropolis

Abstract

Prices are a key determinant of demand which influences revenue and in turn the business' profits. A business may fail if products and services are priced incorrectly. Pricing decision is, therefore, one of the critical success factors of a business, including SMEs. Studies on pricing in organisations have progress from past decades. However, these studies have focused on the bigger companies and have neglected the issues in the context of SMEs. This study sought to assess the pricing methods used by SMEs in the Cape Coast Metropolis. The methodology applied is quantitative in nature and the descriptive study design was used. The simple random sampling technique was adopted in selecting 103 SMEs after which purposive sampling was used to select the managers of the sampled firms. Questionnaire was used to collect the data and the analyses of the data was done using descriptive statistics tools namely: mean, frequency count and percentages. The study revealed that pricing technique and practices were very relevant to SMEs in the Cape Coast Metropolis, helping them to stay competitive to survive. It was established that pricing methods used by SMEs in the Cape Coast Metropolis were consciously considered with different context such as costs, demand, revenue, profits, survival, government regulations and market share. It also came out that owner managers were mostly responsible for the pricing products among the small and medium-sized enterprises in the Metropolis. Pricing was considered as the highest revenue earner and very important to the SMEs. Pricing is a challenging area to most SMEs. Owner managers should complement their knowledge and experience with that of experts in the field of pricing.