PRICING
DECISION
By : Rijen Maharjan
PRICE & PRICING
■ Price is an important part of marketing
mix. Price is the monetary value or
amount assigned to a product or service
that a company offers to its customers.
■ Price is what customers pay for what
they get. It is the amount of money that
customers pay for the product.
■ Pricing refers to the process of
determining and setting the monetary
value or price for a product or service
that a company offers to its customers.
IMPORTANCE OF PRICING
Profitability Market share
Proper pricing strategies can enhance a Pricing can impact a company's market
firm's profitability. Low prices reduce share. Competitive pricing may help a
revenue whereas high price increases the company attract more customers and
cost. increase its market share, while premium
pricing may lead to a smaller but more
loyal customer base.
Selection of Goods and Customer Behavior:
Services:
Pricing is important for the customers in Price has a significant influence on
the selection of goods and services customer behavior. It can affect
offered by marketers as per their financial consumers' willingness to buy, and their
capacity. Depending upon the price, the overall satisfaction with the purchase.
customer can decide about the products
they should buy. As such, the price-
sensitive customer will go for low-priced
products and vice versa.
Quality:
Pricing also makes customers confident
about the quality of goods they buy. Generally, high-
priced product makes customers perceive them as
quality products, and low-priced products are
perceived as low-quality products. Hence pricing is
a tool that helps customers to determine the quality
of goods and services.
INTERNAL PRICE FACTORS
Cost of Product
Production:
The cost of producing the product or
service is one of the most fundamental
Lifecycle:
The stage of the product's lifecycle also
influences pricing decisions. During the
internal factors that influence pricing introductory phase, companies may use
decisions. Companies need to ensure that lower prices to encourage early adoption,
the price set for their offerings covers the while in the mature phase, they may
cost of production, including raw adjust prices to maintain profitability.
materials, labor, and other expenses,
while leaving room for reasonable profit
margin.
Brand Positioning: Marketing Strategy:
The brand image and positioning in the The marketing strategy adopted by the
market impact pricing decisions. A well- company can influence pricing decisions.
established brand with a reputation for Companies positioning themselves as
quality and exclusivity may be able to providers of premium or high-quality
charge a premium price. products may set higher prices to
reinforce this image. Conversely,
companies aiming to compete based on
affordability and mass appeal may opt for
lower prices.
EXTERNAL PRICE FACTORS
Market Demand: Competitor Pricing:
Customer demand for a product or service The pricing decisions of competitors have
is a significant external factor influencing a direct impact on a company's pricing
pricing. When demand is high relative to strategy. Companies need to consider the
supply, companies may be able to set prices set by their competitors for similar
higher prices. Conversely, in a market products or services. If competitors are
with low demand or intense competition, offering lower prices, the company may
prices may need to be more competitive need to adjust its pricing accordingly to
to attract customers. remain competitive.
Market Intermediaries: Government Regulations:
Intermediaries are suppliers, middleman, Government policies and regulations can
transporters. If they change the prices, the influence pricing determination. Price
price of product is affected. Price hike controls, tariffs, taxes, and other
caused by the intermediaries increases the regulatory measures can impact the final
price. Higher commission leads to higher price of a product or service. Companies
price of the product. must comply with relevant pricing
regulations and factor in any additional
costs or restrictions imposed by the
government.
THANK YOU
