Plastics : Simple view of the Market's impact on pricing

Below is a break down of the market's impact on pricing

Price = Costs + Profit Margin, but we must consider:

• What market will pay
• What competitors charge
• What value customer sees

DETAILED BREAKDOWN:

Cost calculation raw material costs:

• Base material price
• Additives/colors price
• Material waste
• Storage costs

Production costs:

• Machine time
• Labor costs
• Energy usage
• Tooling costs
• Maintenance costs
• Quality control costs
• Packaging costs

Overhead costs:

• Building costs
• Administration costs
• Marketing costs
• Transportation costs
• Insurance costs

Market prices analysis:

• Current market rates
• Price trends
• Regional differences
• Volume discounts

Factors:

• Supply/demand
• Raw material costs
• Economic conditions
• Seasonal changes 

Seasonal changes in the plastic market refer to predictable fluctuations in plastic demand, prices, and production that occur during specific times of the year. 

For example, demand for plastic packaging increases during holiday seasons, beverage containers surge in summer, and construction-related plastics peak during building seasons.

Competition research:

• Competitor prices
• Product quality
• Market share
• Service levels

Strategy:

• Premium pricing
• Match competition
• Low-cost leader
• Value-based pricing

Premium pricing is a strategy where products or services are deliberately priced higher than competitors to create a perception of superior quality, exclusivity, or luxury. 

A low-cost leader is a company that offers products or services at the lowest possible price compared to competitors while maintaining profitability, typically achieved through efficient operations and economies of scale. For example, Big companies use their massive buying power and efficient supply chain to offer lower prices than other retailers.

Customer value benefits:

• Product quality
• Performance
• Durability
• Brand reputation

Value adds:

• Technical support
• Fast delivery
• Custom solutions
• After-sales service

Things to remember:

• Price must cover costs
• Stay competitive
• Match value delivered
• Allow profit margin
• Be flexible for market changes

Match value delivered means pricing a product or service to directly align with the actual benefits and value that customers receive from it. The price accurately reflects what the product is truly worth to the customer based on its quality, features, and performance.