Yes, determination of the price of a product is a very crucial decision because of the following reasons:
(a) Key to Revenue: Price and quantity of sales together decide the revenue of any business. Suitable price for the consumer always fetches good revenue.
(b) Attract Customers: Convenient price of the product attracts the customers from other brands also. Brand loyalty can be broken by a lower price in the market.
(c) Edge over Competition: Good quality at reasonable price always provides advantage to the firm as they then keep themselves in a position to remain ahead of the competitors. In the world of tough competition pricing plays a major role in capturing market.
(d) Crucial to Profits: Pricing is crucial to profits. Improper pricing have adverse effect on the profits of any enterprise. This ultimately affect the profit, growth and future of the enterprise.
(e) Platform for achieving other objectives: Short term, long term, primary, and secondary objectives of the firm can only be attained if firms go for profit optimization rather than profit maximization.
