Costs Involved in Making A Product or Service
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Take a position between these two views: Prices should reflect the value that consumers are willing to pay versus Prices should primarily just reflect the cost involved in making a product or service.
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Solution Summary
This solution of 433 words provides an attempt to distinguish between pricing based on market value versus pricing designed to cover costs and explains which one is more important.
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In reality, prices should reflect both of the situations mentioned above. In terms of reflecting the value that customers are willing to pay, this relates to the economic model related to the supply and demand of a product(s) 0r service(s). Given that economic fact, we need to understand the level of demand for our products and services as it relates to the supply available. This represents the fact that any firm needs to understand their particular marketing dynamics which will relate to determining the demand. Once demand is forecast, then we can build upon the supply side in terms of the market place in general, ...
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