Pricing refers to the amount of money exchanged for a product. This value is determined by utility to the consumer in terms of money and/or sacrifice that he is prepared to give for it.

Objectives

* Definite sales volume
* Achieve profit
* Larger market share
* Maintain market share
* Eliminate competition
* Advantages of mass production
* Satisfactory return on capital

Factors influencing price-determination

* Production and distribution costs
* Substitute goods available
* Normal trade practices
* Fixed prices
* Reaction of distributors
* Reaction of consumers
* Nature of demand:
o Elastic
o Inelastic
* Form of market:
o Perfect competition
o Monopolistic competition
o Monopoly
o Oligopoly

Steps to determine price

* Determine market share to be captured
* Set up price strategy
* Estimate demand
* Evaluate competitors' reactions