Pricing :
Price may be defined as the amount of money paid by a buyer in consideration of the purchase of a product or a service. Factors Affecting Price Determination
(1) Product Cost:
One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi Variable Costs are to be considered for determining the price.
(2) Demand :
The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the rm is in a better position to x higher prices.
(3) Competition :
Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
(4) Government and Legal Regulations:
In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act.,
e.g. Medicines.
(5) Pricing Objectives :
Another important factor affecting the fixation of price of a product is pricing objectives,
e.g. maximisation of profit, market share, etc.
