Question & Answer: What factors will (or should) influence a firm’s pricing strategy?…..

There can be several factors detrmining the pricing strategy:

1. First and foremost will be the amount of margins we want to save.

2. The other can be the cost of wages that you incur in producing the goods.

3. Examine the market to which you intend to sell the product, check the cost of similar product. People can pay 20-30% more for a better product but not obviously 100% costlier product.. so keep that in mind.

4. Similarly, examine the age group you are going to target to buy your products.. Does the age group can spend your estimated amount?? Also, the demographics can also play role here..

5. Your total production cost including taxes, innovation and research cost, marketting cost..

6. Economic factors such as taxation rate, labor cost, inflation rate, currency exchange rate, government’s fiscal and monetary policy may also affect your pricing.

7. Demand of your product: If you have got huge demand, you may get the same returns by placing your items at a lower rate or vice versa.

8. The group of society which you target: If it is for more of rich people, product can be placed at a higher price but on contrary, if it is for low earning group, then it needs to be within their range.