PRICING

INTRODUCTION

Pricing is the process of determining what a company will receive in exchange for its product. Pricing factors are manufacturing cost, market place, competition, market condition, brand, and quality of product.

A well-chosen price should do four things:

·         Achieve the financial goals of the company (profitability)

·         Fit the realities of the market place (will customers buy at that price?)

·         Price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product

·         Price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotion (marketing)|promotional campaigns.

Pricing involves asking many questions which can be either within the seller or to the buyer.

·         Should there be a single price or multiple pricing?

·         Should prices change in various geographical areas, referred to as zone pricing?

·         Should there be quantity discounts?

·         Do we use profit maximization pricing?

·         What prices are competitors charging?

How much to charge for a product or service? This question is a typical starting point for            discussions about pricing, however, a better question for a seller to ask is - how much do customers value the products, services, and other intangibles that the seller provides

MACHEULA MONICA