INTRODUCTION
When we talk about the factors to determine in setting prices for product. This has to involve every various things that are put into consideration before setting a price tagged on a product.
Price determinate
This can simply be refers to as various factor put into consideration before placing price on product. As a professional business persons, organization or company prices are not just place or set base on choice, want or anyhow, there are factors that must be put into check before setting prices.
By putting those factors into consideration we be able to set a better price that will both benefits the organization and customers.
Below are the various factors to be considered before placing Price on product:
Marketing
The various methods of marketing must be put into consideration and the cost of acquiring them. The various marketing methods such as distribution system, quality of salesmen, advertising, type of packaging, customer services, etc. also affect the price of a product. For example, a firm will charge high profit if it is using expensive material for packing its product.
Government
The government factor here has to do with the various laws and boundaries the government is likely to place and the taxation level. The firms which have monopoly in the market, usually charge high price for their products. In order to protect the interest of the public, the government intervenes and regulates the prices of the commodities for this purpose; it declares some products as essential products for example. Life saving drugs etc.
Competition level
Competition level is another important factor affecting the price for a product is the nature and degree of competition in the market. A firm can fix any price for its product if the degree of competition is low. However, when the level of competition is very high, the price of a product is determined on the basis of price of competitors’ products, their features and quality e.t.c
Rate of Demand
The level or rate at which customer and consumer make demand for a product can prompt the organization, company or an enterprenur to increase the price this occur when there is high demand level. Usually, consumers demand more units of a product when its price is low and vice versa.
Lastly in the cause of this post is the cost of production
Cost of production is the major or one of the major factor to be considered before setting prices. In the case when the cost of production is high haven determine the cost of raw materials and cost of transportation down to the place of use or point of production. The certainly the price tagged of such product will definitely be higher than when the cost of production is low. Product cost refers to the total of fixed costs, variable costs and semi variable costs incurred during the production, distribution and selling of the product. Fixed costs are those costs which remain fixed at all the levels of production or sales.
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