In: Economics
Explain the role of demand, variable cost, and perceived benefits/value in pricing and discuss how does price influence perception of quality.
Price of any goods or services depends on many factors. It is mainly determined by the demand and supply of that particular good or service but there are many other factors which affect price of a good.
Price influence the perception of a quality because it has a psychological effect on the mind of the consumer. Consumer thinks that if the price of a product is high than its quality must be high and vice versa.