Factors Affecting The Pricing Decision Of The Price Of Goods And Services
The setting of prices in marketing is influenced by a variety of factors. These factors could be internal to the organization or external to the organization. One major determinant of the price of goods or services is how the customer will react to the prices. This is mainly because though customers usually purchase goods and services based on their perception of value and not solely on the price of the product alone, the price of the product influences their perception of the product.
FACTORS AFFECTING PRICING DECISIONS
Several factors influence the pricing decision of firms. Some of the major factors include – pricing objectives, strategy, cost, competition, customer expectations, government regulations and demand. These factors could be divided into two set of factors – internal and external factors.
The internal factors are usually under the control of the firm and are a result of the company’s actions and decisions. The organization may be able to alter some of these factors to impact on their pricing decision. The external factors on the other hand are factors which impact on the setting of price by the firm but are beyond the control of the firm. The organization has to constantly monitor its market to mitigate the effects of these factors on its pricing decisions.
The objectives of a firm are critical in the setting of prices. These objectives seek to address the priorities of the firm. A firm could have multiple objectives but most…