Pricing policies Essay Example for Free

Pricing policies EssayThe main Factors that affect the expenditure being supercharged by your chosen business for their product/service The pricing decisions for a product are abnormal by internal and external factors. A. Internal Factors 1. Cost While pickle the prices of a product, the mansion should image the cost involved in producing the product. This cost includes both the variable and fixed costs. Thus, while fixing the prices, the regular moldiness be able to recover both the variable and fixed costs. 2. The predetermined objectives While fixing the prices of the product, the vender should consider the objectives of the firm. For instance, if the objective of a firm is to step-up return on investment, then it whitethorn charge a higher price, and if the objective is to capture a large market share, then it may charge a lower price. 3. Image of the firm The price of the product may also be determined on the basis of the image of the firm in the market. For insta nce, HUL and Procter Gamble can demand a higher price for their brands, as they enjoy goodwill in the market. 4. Product life cycle The fix up at which the product is in its product life cycle also affects its price.For instance, during the introductory stage the firm may charge lower price to attract the customers, and during the growth stage, a firm may increase the price. 5. Credit period offered The pricing of the product is also affected by the credit period offered by the company. Longer the credit period, higher may be the price, and shorter the credit period, lower may be the price of the product. 6. Promotional activity The promotional activity undertaken by the firm also determines the price. If the firm incurs heavy denote and sales promotion costs, then the pricing of the product shall be kept high in rank to recover the cost. B. External Factors 1.Competition While fixing the price of the product, the firm needs to study the arcdegree of competition in the market. I f there is high competition, the prices may be kept low to effectively pillowcase the competition, and if competition is low, the prices may be kept high. 2. Consumers The marketer should consider various consumer factors while fixing the prices. The consumer factors that mustiness be considered includes the price sensitivity of the buyer, purchasing power, and so on. 3. Government control Government rules and regulation must be considered while fixing the prices. In certain products, government may announce administered prices, and therefore the marketer has to consider such regulation while fixing the prices.