Is the process of determining what a company will receive in exchange for itsproducts? Pricing factors are manufacturing cost, market place, competition,market condition, and quality of product. The other three aspects areproduct, promotion, and place. Price is the only revenue generating elementamongst the four Ps, the rest being cost centers,The needs of the consumer can be converted into demand only if theconsumer has the willingness and capacity to buy the product. Thus pricing isvery important in marketing.
Questions involved in pricing
How much to charge for a product or service?How much do customers value the products, services, and other intangiblesthat the company provides?What are the pricing objectives?How to set the price? (Cost-plus pricing, demand based or value-basedpricing, rate of return pricing, or competitor indexing)What image do you want the price to convey?Do you use psychological pricing (personal perception what you feel is right),Logical pricing (fair market price based on demand & supply of the product)OrPremium pricing: prestige pricing (also known as prestige workmanship)Where once believe in reputation of the company rather than sales volume)
What a price should do
A well chosen price should do three things:Achieve the financial goals of the company (e.g., profitability)Fit the realities of the marketplace (Will customers buy at that price?)Support a product's positioning and be consistent with the other variables inthe marketing mixPrice is influenced by the type of distribution channel used, the type of promotions used, and the quality of the productPrice will usually need to be relatively high if manufacturing is expensive,distribution is exclusive, and the product is supported byextensive advertising and regular promotional campaigns.