Factors affecting pricing decisions there are number of factors affecting the pricing decisions and price is not determined simply, there are many factors affecting pricing decisions. External factors there are a number of influencing factors, which are not controlled by the company but will impact pricing decisions. The price of the product may also be determined on the basis of the image. Factors affecting pricing policy management education. Consumer such as social, cultural, personal and psychological.
Understanding these factors requires the marketer conduct research to monitor what is happening in each market the organization serves since the effect of these factors can vary by market. European network of economic policy research institutes the influence of supply and demand factors on aggregate health care expenditure with a specific focus on age composition erika schulz enepri research report no. Factors influencing pricing decisions pricequality relationship. Meaning of internationalpricingglobal pricing is one of the most critical and complex issues that globalfirms face so it can give a break or a boost to companys revenue. Factors that influence pricing small biz viewpoints.
A firm also has to look at a myriad of other factors before setting its prices. Differences in quality standards influence pricing decision. From the spss findings and analysis, firm cost structure p value 0. Pricing is both an art as well as science as we discussed in earlier post on ten commandments of pricing. Group 5 manoj bhoye 15pgp087 nithin manuka 15pgp088 shruti mate 15pgp089 jaffar md 15pgp090 nabil abdulla 15pgp091 nikita rokde 15pgp092 marketing management ii 2. Factors affecting pricing decisions business study notes. If the distribution channel is large, price of the product will be high and if the distribution channel is short, the price of the product will be low. An enormous number of factors affect pricing decisions. Government policies influence the legislative and economic frameworks. Cost data occupy an important place in the price setting processes. Join s of fellow business teachers and students all getting the tutor2u business teams latest resources and support delivered fresh in their.
The competitors also keep an eye on the price levels of a company. A pricing policy is a standing answer to recurring question. A systematic approach to pricing requires the decision that an individual pricing situation be generalised. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing. Factors affecting dividend policy various factors that have a bearing on the dividend policy maximisation of owners wealth is the objective of the financial managers job. This is another unavoidable factor that can influence the pricing of your product. The fourth c, capacity, is especially important in service businesses with high fixed costs and fluctuating demand. Main factors affecting price determination of product are. Factors influencing pricing decisions management study hq. Premium pricing use a high price where there is a uniqueness. Factors influencing pharmaceutical pricing a scoping. The profitability can be improved through the expense management making this an opportunity for the banks to control it.
This cost includes both the variable and fixed costs. This paper examines factors that affect pricing decision for export markets, and. Meanwhile, there are various other factors influencing the purchases of pinki rani, assistant, lic, kurukshetra. External and internal factors ffcting the product and business process innovation 19 investment attractiveness, intensity of competition, company size, origin of ownership and export orientation. The basic factors that influence policy formulation are. While fixing the prices of a product, the firm should consider the cost involved in producing the product. The factors affecting pricing decisions are varied and multiple. Another factor affecting the companys pricing structure is competitors cost and pricing. They can be categorized into i external and ii internal factors. Understand why companies must conduct research before setting prices in international markets. A 10 percent increase in inflationmacroeconomic policy shock.
Here are nine factors to take into consideration when pricing. One of the most complicated aspects of foreign trade is pricing policy. Kite, it is a managerial task that involves establishing pricing objectives, identifying the factors governing the price, ascertaining their relevance and significance, determining the product value in monetary terms and formulation of price policies and the strategies, implementing them and controlling them for the. Factors that affect pricing strategies for international journal of. Part guesswork, part experience, part number crunching how ever you look at it, determining your price is a difficult task. Key factors influencing pricing strategies for small. Factors affecting pricing policy are divided into two parts. Apr 10, 2012 the 4c framework in pricing suggest that pricing is determined by customers willingnesstopay, costs, competition, and capacity. On one hand, prices influence medicines affordability and access to health products and, on the other, they are a crucial incentive for pharmaceutical companies to develop new products and, thus, for industrial policy. One of the main ideas in theories of industry evolution is that the. Factors effecting pricing indian institute of management raipur 1 submitted by.
There is no one right way to determine the price of products or services you are selling. Pdf an examination of factors that affect pricing decisions for. This would allow designing appropriate policies to fuel the production of low price arvs or to implement the most effective procurement processes. Oct 23, 2012 factors influencing international price 1. Nov 18, 2009 an analysis of factors influencing arv prices is very relevant to increase longterm efficiency best value for money in the provision of haart. Thus, these are the major factors that influence the pricing decisions. In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of product. If the world population grows over the next decade, the demand for most food products will increase and shift to the right, as seen in figure 7. Implies a pathway through which the final products of manufacturers reach the end users. Demand is the single most important factor affecting price. This study examined the significant factor influencing pricing decision in nigeria. Attitudes, social values and norms of the top management. The price of your product is more than just a number you plug in to your. Basically, the prices of products and services are determined by the interplay of five factors, viz.
Other external factors some other external factors can affect setting the price such as. Economic and financial resources available to it at a particular point of time. Customers use price as an indicator of quality particularly for products where objective measurement of quality is not possible, such as drinks and perfumes. The competitors also keep an eye on the price levels of a. Nine factors to consider when determining your price. Pdf factors influencing pharmaceutical pricing a scoping. Factors influencing international price slideshare. A number of factors influence the remuneration payable to employees. Price is only relatively important, greater emphasis should be placed on non price factors the price quality relationship is important. Price strongly influences quality perceptions of such products. Pdf pricing strategy has played an important role in consumer purchasing behavior. The reason is that the price is a very sensitive issue for the customers in their purchasing behavior.
Outside of a few industries, such as retail and energy, in which pricing is heavily studied and practices are wellestablished, pricing is often an afterthought, based on only one main factor plus some gut feeling, rather than the many factors that should be considered. Data collection results november 2005 enepri research reports are designed to make the results. Lets have a look at some of them and try to understand the best policy strategy in various situations. You for sure might be wondering as to what is it that influences these consumers, how do we analyzes when is their purchase pattern going to change. When factors of demand are large enough to influence the total demand for a good, the demand curve will shift. One of the key elements of a product, which enters in to a new market, is its price. External factors that are considered to influence an organisations pricing strategy include. A companys price level sends signals about the quality of its products to the customer. A customer always compares the companys prices with those of its competitors. Factors influencing 2019 premiums medical spending trendsincluding will push premiums higher.
Factors external to an organization are labour market, cost of living, labour unions, government legislations, the society, and the economy. Higher colleges of technology, sharjah, united arab emirates. Factors affecting transfer prices in multinationals. Ngos, business lobbying attempts to use information, research, or stakeholder opinion to influence governmental policy by an individual or organization. Of course only the influencing factors will confirm what will change the consumers buying pattern. It should call for an effective market intelligence of the competitors pricing decision. On one hand, prices influence medicines affordability and access to health products and, on the other, they are a crucial incentive for pharmaceutical companies to develop new products and, thus, for industrial policy 3. If a product is priced higher, the instinctive judgement. Economic factors like inflation deflation and interest rate affect selling price because they affect cost of production and consumer perceptions related product. Understand the factors that affect a firms pricing decisions. Some other external factors can affect setting the price such as. The pricing of the products involves consideration of the following factors.
Within the broader content of the political system, public policy comprising several elements aiming. What are the factors influencing pricing decisions in a. Factors influencing pricing decisions request pdf researchgate. Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the businesss marketing plan. The current state of knowledge on the important factors influencing oil prices have been identified in relevant venues, including recent academic literature, government reports, policy debate, and industry analysis. However, factors come together here does not mean that every factor should become one necessary part in a policy.
The price of raw materials and other inputs affect. Factors influencing pricing strategy your business. Pricing is often one of the most difficult things to get right in business. Today we will be looking at 10 factors affecting transfer prices in multinationals. We all know that transfer pricing can be abused by mutational in their bid to evade taxes or avoid taxes thereby improving profit for their owners. Marume ba, hons ba, ma, madmin, msoc sc, phd senior lecturer and acting chairperson department of public administration abstract. A marketing manager should identify and study the relevant factors affecting the pricing. Pricing is considered as part of 4ps of marketing mix. Some factors are internal to organisation and, hence, controllable while other factors are external or environmental and are uncontrollable. Consumers buyer behaviour is influenced by four major factors.
Pricing product, external and internal factors affecting. While fixing the prices of a product, the firm should consider. Since demand is affected by factors like, number and size of competitors, the prospective buyers, their capacity and willingness to pay, their preference etc. An examination of factors that affect pricing decisions for export markets article pdf available august 2008 with 3,792 reads how we measure reads.
Specifically, the researcher sought to establish the influence of competition. Factors influencing their pricing are relevant both to the welfare and to the economic development of nations. Considerations involved in formulating the pricing policy 3. What are the factors influencing pricing decisions in a market. Thus, pricing policy is a crucial decision for any business organisation. Following are the two main factors affecting pricing. In economics, there are four main factors of production, namely land, labor, capital, and enterprise. Request pdf factors influencing pricing decisions in this paper, we look at factors that affect how marketers set price. Pricepricing objectives, factors, methods, strategies. This paper contributes towards better understanding on developers view on how the housing price is determined and form a basis for government to help tackle the housing affordability issue. Factors of production can be defined as inputs used for producing goods or services with the aim to make economic profit. Some of the major factors influencing pricing decisions of a company are as follows. Public policy and factors influencing public policy dr. A firm also has to look at a myriad of other factors.
Companies develop pricing strategies after considering a variety of factors. Whatever decision heshe makes, whether it is investment decision, financing decision or dividend decision, heshe has to maximise value of the firm. In determining a pricing policy, a company should not only consider the immediate effect of prices, but also give due weight to the reaction of competitors. Pricing factors to consider when setting price business. To a large extent, the price is based on the value customers perceive to get from the product and what they are willing to pay for it. The market demand for a product or service obviously has a big impact on pricing. It was established that there was statistically significant relationship between distance of a parcel of land to the nearest metro station and land price damm, lernerlam, and young, 1980, while there was evidence that residential property. But there is a legitimate strong case for the use of transfer pricing especially in the area of motivating staff. Factors influencing employee remuneration management study hq.
Lessons from experience iii foreword the dynamism of the rural sector has been a major contributor to overall growth in most developing. Therefore, before deciding the price the marketer has to keep in mind the factors affecting the price. The pricing decisions for a product are affected by internal and external factors. Setting prices that are too high can prevent customers from buying your products. For example, pricing a hotel room in low season is very different than in prime season. When smes develop their pricing strategies, they need to be aware of factors that can assist.
In this paper, we briefly survey the current state of. As an entrepreneur, you should know that economic factors such as taxation rate, labor cost, inflation rate, currency exchange rate, governments fiscal and monetary policy will definitely influence your adopted. The most important factor affecting the price of a. Factors affecting pricing as noted, the main reason for entering different markets is to increase the income and profitability. The price that an entrepreneur pays for availing the services of these factors is called factor pricing. Marshall has developed the theory of how price influences customers. Factors that affect pricing strategies for international. We will also look at the criteria defined in pricing under incoterms 2000. Reaction of competitors influence pricing decision. Those factors include the offerings costs, the demand, the customers whose needs it is designed to meet, the external environmentsuch as the competition, the economy, and government regulationsand other aspects of the marketing mix, such as the nature of the. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the organization serves since the effect of these factors.
In most conditions, there are only two or three factors influence the policy making. Nov 28, 2012 price determination is a very difficult task as it is affected by a number of factors. There are number of factors affecting the pricing decisions and price is not determined simply, there are many factors affecting pricing decisions. Your product or service prices impact your profitability as well as the perception of your brand in the marketplace. A 10 percent decline in cotton price resulting from a similar fall in international prices price policy with or without esap.
An examination of factors that affect pricing decisions for. Public policy and factors influencing public policy. Factors influencing pricing strategies among supermarkets in nairobi city. Underlying health care costs continue to increasedriven in.
Factors affecting price determination before making policy, strategy and technique of determining price of goods or services, a marketer should consider both internal and external environmental factors of the firm that affect the pricing. Factors influencing 2019 premiums in the individual market. Factors influencing policy formulation and decision. The most important factor affecting the price of a product is its cost. There are several factors a business needs to consider in setting a price. Factors influencing global antiretroviral procurement prices. The level of staff expenses appears to have a negative impact on banks roa in the. Jun 27, 2019 factors influencing their pricing are relevant both to the welfare and to the economic development of nations. As a result of the wide variety of influencing factors that tend to pull and push policy in different directions, public policy change often happens slowly. Evidence, political, economic and social factors supplement with each other, preparing for the fully consideration of policy making. Important factors that influence consumer behaviour.
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