What are the factors affecting determination of the price of a product or service? Explain.
Answers
SOLUTION :
The factors affecting determination of the price of a product or service are :
(a) PRODUCT COST :
Cost is the most important factor while deciding the price. It includes manufacturing cost, office and administration cost and selling and distribution cost. While deciding the price , profit margin is added in the cost.
(b) UTILITY AND DEMAND :
If the buyer feels the benefits are justified as per the price, he /she prepares the mind to buy. Similarly , when there substitutes are available , low price has to be charged and in case if the product is unique , high price may be changed.
(c)EXTENT OF COMPETITION :
In case of low Competition , high price may be charged and in case of high competition, low price has to be fixed.
(d) GOVERNMENT AND LEGAL REGULATIONS :
There are certain commodities which are essential for the well being of the society. So , the government may have to fix the maximum price to be charged by the seller especially in case of essential commodities.
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Answer:
Those factors include the offering's costs, the demand, the customers whose needs it is designed to meet, the external environment—such as the competition, the economy, and government regulations—and other aspects of the marketing mix, such as the nature of the offering, the current stage of its product life cycle,