Price is the sole factor of marketing that is used by businesses to make income and thus, generate profits. With this in mind, any marketer must be able to easily adopt strategic and planned approach when it comes to their pricing decisions. As for marketers, they ought to know what factors are influencing pricing decisions before setting the product’s price and introducing it to the market.
But what are actually these factors that impact pricing? In fact, there are many of them and we will be trying to cover the most essential ones briefly.
This remarkably has a big impact on pricing decisions. Marketers must set the price as per the goals of organization. To give you an example, a business has a goal of producing top-quality products. With this in mind, the prices would be set accordingly to the product’s quality. Likewise, if the business has an end goal of increasing their sales by around 20 percent yearly, then there must be reasonable prices that should be set in increasing product’s demand.
Just like everything else, this is a big influence on how the pricing decision will be finalized. The business might opt to sell products at a lower price compared to their competitors even it’s incurring high costs.
By means of sticking to this strategy, the company is able to increase their sales in just a short period of time but can’t survive in the long run.
Therefore, marketers ought to analyze the cost before they set their prices. This is in an effort to minimize potential losses in the long run. As for the costs however, it may include the following:
- Raw Materials
- Distribution Overhead
- Advertising Costs
- Sales Promotion
- Admin and Office Overheads
Regulatory and Legal Issues
If costing impacts how the price would be set, then these issues are what persuading marketers in changing their pricing decisions. Both regulatory and legal laws are setting the price on different products. These laws might result to the freezing, fixing or even controlling the prices at its max or min levels.
Basically, this is also the same principle followed by Firmajulegaver and several businesses in determining whether they should change the price of their products or not.