Question

5. What are the steps in setting pricing?

Answer 1

5. The steps in setting up a pricing policy is:

• The objectives of a pricing policy : What are the objectives of a pricing policy determines what price is to be set., Weather the prices are set for :

a)maximum profit

b)gaining maximum market share

• Demand for the product is determined:

There is normally an inverse relationship between price and demand. The higher the price set, the lower will be the demand,

• The price of the product is determined after estimating all the associated costs of the product:

The fixed costs and variable costs associated with the product.

• We also need to analyze the price set by the competitors

The firm cans set up a price, depending upon the price set by the competitors, the costs of the competitors.

• Then we can select a pricing method.
• Finally we can determine the final price.