Question

Discuss the three influences on pricing decisions. Which do you think is most important, and why?

Answer 1

Pricing decisions for any company is the most important as such such pricing decisions influences various factors, like quality of products, services rendered etc, which can lead huge profits or huge losses.

The major three influences on pricing decisions are :

• Market conditions : various government regulations and policies changes market trends and due to this the company have to change its pricing decisions. Due to recession in market company may have lower its prices.
• Size of the company : also plays an important role in pricing decisions, whether the company can afford much price cuts or not, Big companies can bear huge cuts whereas smaller cannot.
• Reaction of competitors : how competitors react on your price in decision is also an important points to be considered. Various pricing decisions are done keeping in mind the reaction of competitors.

Market conditions is considered to be the most important as market is the only place where the product are to be sold and market conditions always influences the pricing decision.