The Value That Consumers Are Willing For Pay Or Should Prices

1099 Words Jul 28th, 2016 null Page
1. Do you believe that prices should reflect the value that consumers are willing to pay or should prices primarily reflect the cost involved in making a product or service? Defend your answer.
When it comes to determining the sales price of the company, the managers of the company must look at multiple variables such as expenses and competition. Most of the time companies will look at the amount of expenses they have put into their products to determine the sales price. Companies must look at their profit margins to ensure that they are generating enough revenue to continue success and be able to continue to grow through the years. While maintaining a healthy profit margin will also give the company the ability to lower the sales price if needed while still maintaining a profit. The company must leave room to adjust to competitors in the industry. In an industry that does not have much competition and is more like a monopoly then the company can set their sales price at the price customers are willing to pay. For example, three years ago YETI developed a cooler that is supposed to be the best cooler in the world for holding ice while also having great durability. For the average size cooler, the price was listed at $350.00. Customers were willing to pay the extremely high price due to the product being the only one on the market of its kind. Today there are many coolers that are out and developed that are very similar to the YETI cooler. Since YETI has been forced to lower…

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