Pricing Process
“What is the so-called pricing process?” Pricing is the determination of monetary amount in exchange on the commodity sold or the service rendered by the business. In pricing, the Business should consider the following factors that affect pricing:
1. The manufacturing or production cost. Variable and fixed costs are the costs incurred in a product or service. Examine whether the costs that have been incurred in the commodity sold or service rendered are going to be covered up by the revenue given in a price. The business should also see if it will generate profit and their objective or goal will be reached.
2. The Market place and market condition. The business must know the capability of the consumers to buy at a certain price or to know how much can the consumer in a certain market can spend. Price discrimination happens when a price in a low-level area is different in a high-level or industrial area. The Law of Supply and Demand takes a very big role in determining the amount of money that should be given to a commodity or service.
3. The Competitors. The competitors of a certain business should be studied very carefully. The competitors’ price can be used as a baseline of the business. It can tell whether the businesses will lower or higher the price. The quality of the product offered by competitors can be used as a price basis in a sense that businesses will know what quality can be offered aside from the competitors.
These are just a few factors that need to be examined and to be studied by the company to determine what monetary amount should be given in a certain commodity or service.
Setting a right price is a complex task. Price has a major impact on the health of the businesses’ profitability. Pricing policy should be part of the overall business planning. Pricing is critical in the survival and success of the business.
1. The manufacturing or production cost. Variable and fixed costs are the costs incurred in a product or service. Examine whether the costs that have been incurred in the commodity sold or service rendered are going to be covered up by the revenue given in a price. The business should also see if it will generate profit and their objective or goal will be reached.
2. The Market place and market condition. The business must know the capability of the consumers to buy at a certain price or to know how much can the consumer in a certain market can spend. Price discrimination happens when a price in a low-level area is different in a high-level or industrial area. The Law of Supply and Demand takes a very big role in determining the amount of money that should be given to a commodity or service.
3. The Competitors. The competitors of a certain business should be studied very carefully. The competitors’ price can be used as a baseline of the business. It can tell whether the businesses will lower or higher the price. The quality of the product offered by competitors can be used as a price basis in a sense that businesses will know what quality can be offered aside from the competitors.
These are just a few factors that need to be examined and to be studied by the company to determine what monetary amount should be given in a certain commodity or service.
Setting a right price is a complex task. Price has a major impact on the health of the businesses’ profitability. Pricing policy should be part of the overall business planning. Pricing is critical in the survival and success of the business.