Explain factors affecting pricing decisions. What are the Factors Influencing Pricing Decisions in a Market? 2019-01-07

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Factors That Affect Pricing Decisions

explain factors affecting pricing decisions

An example of the importance of demographics is the recent trend by manufacturers to cash in on the market known as 'the tweens'-girls aged 10 to 13. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market. Presently due to increased interest rate by Reserve Bank of India, the manufacturers have to pay a higher cost of capital which will be reflected in the price to be charged. Explicability The company should be able to justify the price it is charging especially if it is on the higher side. The best part of it all is having the ability to maximize your profits without necessarily affecting the environment around you. With so many products sold online, consumers can compare the prices of many merchants before making a purchase decision. Laws and regulations' examples include licensing laws,customes laws,and labour laws,sorry it should be licensing regulations.

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15.2 Factors That Affect Pricing Decisions

explain factors affecting pricing decisions

What do you aim to achieve with your pricing strategy and tactics? If supply is relatively stable, prices can fluctuate higher and lower as demand increases or decreases. So whatever product pricing strategy you choose; just make sure it positively adds to your bottom line. Key Takeaway In addition to setting a pricing objective, a firm has to look at a number of factors before setting its prices. Negotiating margins should be built which allow prices to fall from list price levels but still permit profitable transactions. These funds may come from their own savings or from a bank or fi nancial institution in the form of credit.

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Pricing

explain factors affecting pricing decisions

However, it does not follow that there must be a unique theory corresponding to every. A high demand for a currency means that currency will rise relative to other currencies. To make sure all costs are included, you may want to highlight the fixed costs in one color e. Goal setting is the primary function of planning. Additionally, per the publisher's request, their name has been removed in some passages.


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Factors Affecting Pricing Product: Internal Factors and External Factors

explain factors affecting pricing decisions

The and that governments and their central banks put in place have a profound effect on the financial marketplace. If total costs exceed total revenue, the company suffers a loss. T … he solution should be to listen to objections and take notes on them and then really do your homework. In this case the business tries to keep its price low, so that a sufficient proportion of its product or service should be sold. There is one ongoing price in the whole market and no single buyer or seller can affect this price. Fixed costs are those costs which remain fixed at all the levels of production or sales.

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4 Factors That Shape Market Trends

explain factors affecting pricing decisions

The organization also assesses that how the competitors respond to changes in the prices. More broadly, price is the sum of the values consumers exchange for the benefits of having or using the product or service. The service provider may be the main provider, an agent or a sub-agent. There many ways to deal with such an issue. For example, when a new offering is launched, its promotion costs can be very high because people need to be made aware that it exists. How much to charge for a product or service depends on a multitude of factors such as competition, cost, advertising, and sales promotion.

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External Factors That Affect Pricing Decisions Essay

explain factors affecting pricing decisions

When firms get together and agree to charge the same prices. Positioning Strategy: Positioning strategy involves the choice of target market and the creation of a differential advantage. Another entrepreneur that won at the product price level was Sam Walton, founder of Wal-Mart. For the remainder of this tutorial, we look at factors that affect how marketers set price. Government effects trends mainly through monetary and fiscal policy. In the introductory product life cycle or liberal returns policy, the price is likely to be high. When the economy is weak and many people are unemployed, companies often lower their prices.

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Price Determination: 6 Factors Affecting Price Determination of Product

explain factors affecting pricing decisions

Example of monopolistic competition is water service which supplier of water has no substitutes. Public relations is the development of a favorable image for a company, its products or its policies. If something is in demand and supply begins to shrink, prices will rise. A firm can fix any price for its product if the degree of competition is low. Among small manufacturers, it is a common practice to quote lower prices than those of major producers, because their total sales volume in no way poses a threat to big producers.

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Factors Influencing Pricing Strategy

explain factors affecting pricing decisions

Operations managers have to consider factors like the nature ofdemand, the degree of vertical integration, flexibility, degree ofautomation, and quality level and degree of customer contact whilemaking process design decisions. Bigger packages are not always better value for money than smaller ones. Level of market demand This is the fifth factor that can greatly affect your product pricing strategy. The number of competing products and substitutes available affects the elasticity of demand. The intent of the act is to protect small businesses from larger businesses that try to extract special discounts and deals for themselves in order to eliminate their competitors. However, managers must also be aware of the type of market structure in which they operate, since this has important implications for strategy; this applies both to short-run decision making and to long-run decisions on changing capacity or entering new markets.

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4 Factors That Shape Market Trends

explain factors affecting pricing decisions

If total costs exceed total revenue, the company suffers a loss. This differentiation helps the customers assess to the value of services they receive. It is calculated by subtracting the tax you are required to pay from your gross income or total income. As the seller is single and the buyers are much more, therefore the seller charges a relatively higher price because there is no fear of competition. Make sure you are aware of the support available for a product before you purchase it.

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