What factors should be considered in price setting, of these factors which is most important and...

What factors should be considered in price setting, of these factors which is most important and why?

Expert Solution

This is the act of fixing price in which customers can purchase the good or service.

Factors to be considered:

No.1) Market: understanding the market is very important – if the demand for product is down its price would also be down.

No.2) Economy: If the economy is down (like recession), higher product price of luxury goods may not attract customers.

No.3) Market share: If the product has big market share in terms of meeting demand, a slight higher price could be set.

No.4) Costs: If the cost of making product is low, the price could be set low and still the maker can get substantial amount of profit.

No.5) Bargaining power: If customers have this power (like the consultancy service), price should be set slightly high because by bargaining the price will be down.

Important:

The most important factor is “cost”. There are two kinds of cost – fixed and variable. The business should try to minimize these costs constantly so that the price could be set at the minimum always, what customers always looking for. The equation of price for each product is as below:

Price = Average total cost (ATC) + Profit margin

The business should try to cut unnecessary costs like welfare cost, general electricity, etc. and should try to sit with suppliers for availing discounts on raw material purchase. These things keep the cost minimum as well as the price.

Rahul Sunny answered 1 year ago

In management, what are the most important general environment factors to be considered for Better World...

In management, what are the most important general environment factors to be considered for Better World Books and what is their effect, positive-negative-neutral?

When evaluating research, what factors should be considered? Why are these factors important? Provide some examples...

When evaluating research, what factors should be considered? Why are these factors important? Provide some examples to illustrate the importance of each factor.

When evaluating research, what factors should be considered? Why are these factors important? Provide some examples...

When evaluating research, what factors should be considered? Why are these factors important? Provide some examples to illustrate the importance of each factor.

What are the key factors to be considered with the most appropriate type of reuse? Which...

What are the key factors to be considered with the most appropriate type of reuse? Which features are supported by most of the web application frameworks? What are some essential elements of component based software engineering?

Week 2 a) What factors should be considered in determining the issue price of a debenture....

Week 2 a) What factors should be considered in determining the issue price of a debenture. b) On 1 July 2018 Bombo Ltd issues $2 million in six-year debentures that pay interest each six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective-interest method. Required: (i) Determine the issue price of the debenture. (ii) Provide...

a) What factors should be considered in determining the issue price of a debenture. (2 marks)...

a) What factors should be considered in determining the issue price of a debenture. b) On 1 July 2018 Bombo Ltd issues $2 million in six-year debentures that pay interest each six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective-interest method. Required: (i) Determine the issue price of the debenture. (ii) Provide the journal...

When setting the ethics level for your company, which factors were most important in your decision...

When setting the ethics level for your company, which factors were most important in your decision about which ethics level to choose? Which groups of people were likely to be affected by your decision? (Based on the Institute of Management Accountants’ Statement of Ethical Professional Practice)

1a. What are 2 important factors that should be considered when developing effective drug policy? 1b....

1a. What are 2 important factors that should be considered when developing effective drug policy? 1b. Give an example of an unintended consequence associated with inappropriate drug policy?

What factors should be considered when investigating variances?

What is the difference between external and internal pricing? What factors must be considered when setting...

What is the difference between external and internal pricing? What factors must be considered when setting internal transfer pricing between divisions of a company? What are the different methods of setting internal transfer pricing? Which is the most effective? Why?

Question

What factors should be considered in price setting, of these factors which is most important and...

Solutions

Expert Solution

Related Solutions

In management, what are the most important general environment factors to be considered for Better World...

When evaluating research, what factors should be considered? Why are these factors important? Provide some examples...

When evaluating research, what factors should be considered? Why are these factors important? Provide some examples...

What are the key factors to be considered with the most appropriate type of reuse? Which...

Week 2 a) What factors should be considered in determining the issue price of a debenture....

a) What factors should be considered in determining the issue price of a debenture. (2 marks)...

When setting the ethics level for your company, which factors were most important in your decision...

1a. What are 2 important factors that should be considered when developing effective drug policy? 1b....

What factors should be considered when investigating variances?

What is the difference between external and internal pricing? What factors must be considered when setting...