Price is the amount which is charged by the manufacturer for the goods. It is the only element of marketing mix which generates revenue and profit to the company. For a manufacturer it is the quantity of the money received by the firm and for a consumer it is the quantity of the goods and services received by the buyer.
Aim of pricing decision
Ø The aim of pricing should be that the firm should maximize the profit.
Ø The firm should get minimum return on investment.
Ø The firm should get specified market share.
Ø Price should be equal to that of competitor.
Pricing determination procedure
1.) First of all the target market has to be identified.
2.) Then the company has to decide the product’s market position.
3.) Then price elasticity of the product is decided.
4.) The product life cycle is also considered.
5.) Competitor’s price is also analyzed.
6.) Other environmental factors are also considered.
7.) After this suitable price is selected.
8.) Then lastly, the price, its methods, procedures are reviewed periodically.