Key Factors in Product Price Determination
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Factors Influencing Price Determination
Base or list price: Refers to the unit price of the product at its point of production or resale. It does not reflect discounts, freight charges, or other adjustments, including allocation for a price leader.
Setting a price for an established product is generally less difficult than pricing a new product.
Estimating Demand
Key steps include:
- Determine if there is a market-expected price.
- Estimate potential sales volume at various price points.
Note:
- This is usually expressed as a price range rather than a specific amount.
- Intermediaries should be considered; it is easier to promote products if they align with their pricing expectations.
- Setting a price much lower than market expectations can lead to lost sales.