Marketing Pricing

Before entering the market, any enterprise must determine the price of the goods. It is on this that the company's profit and its success in the market depend. The determination of the best price is influenced by several factors.

How to determine the price level

The price of goods is affected by internal and external restrictions. The internal costs include the costs and profits of the enterprise, and the external ones include the purchasing power, as well as competitors' prices for similar products.

A marketer must perform a series of actions when determining the price of a product. It should be borne in mind that not every organization can independently set the price of a product. The thing is that any company that produces goods has many competitors in the market. If the organization does not have market power, it must accept the price of the product that the market sets.

Not only the financial power of the organization affects the determination of the price of goods. Of particular importance are the features of the product itself. The price is also influenced by the company's own goals. The pricing method can be any. Choosing the right one, it is necessary to take into account the stage of the product’s life cycle, the degree of its novelty. The lowest possible price can be determined by taking into account the cost of production. But the maximum price depends on whether the product has any unique qualities.

The average price level characterizes the cost of substitute goods, as well as the prices of goods of competing firms. When determining the level of favorable prices, it is necessary to consider the tasks of pricing. The magnitude of demand should be taken into account. When it is large, the price can be raised. With little demand, sales can increase price reductions. The marketer must evaluate the elasticity of demand at a price and only then make a decision.

Of great importance is the estimation of production costs. The marketer in the work must take into account fixed, gross and variable costs. The price of goods is set by the marketing department at such a level that not only all production costs are covered, but also profit.