What factors should be considered in price setting? Which of these factors is most important? Why? Why is adapting the price of a product important?
What factors should be considered in price setting?
To improve a company's pricing capability, managers should focus on the process, not on the outcome. The question to ask is: Have we addressed all the considerations that will determine the correct price? Price setting should also complement the company's overall marketing strategy. A company's pricing policy sends a message to the market - it gives customers an important sense of a company's philosophy.
Those who involve in the coordination of price process (that is, the participants in the pricing process which are accounting provides cost estimates; marketing communicates the pricing strategy; sales provides specific customer input; production sets supply boundaries; and finance establishes the requirements for the entire company's monetary health) should understand the pricing objective. This is because proper pricing requires input from a number of people, but if there is no mechanism in place for creating a unified whole from all the pieces, the overall pricing performance is likely to be dismal (Dolan, 1995).
The solution examines factors to be considered in price setting. The factors that are most important are determined.