Introduction

Choosing a pricing objective and associated strategy is an important function of the business owner and an integral part of the business plan or planning process. It is more than simply calculating your cost of production and tacking on a markup. Pricing is one of the major components of marketing plan, which is a component of a full business plan. Assigning product prices is a strategic activity. The price assigned will impact how consumers view your product and whether they will purchase it. Price also helps differentiate your product from those of your competitors. However, the price assigned must be in line with other marketing strategies and the product attributes.

Early Pricing Practices

The practice of pricing has a very long history. The oldest records of prices ever found are clay tablets with pictographic symbols found in a town known as Uruk, in what was ancient Sumer and what is now southern Iraq. These price records are from 3300 BC—they’ve survived 5,300 years. The documents—records of payment for barley and wheat, for sheep, and for beer - are really receipts. “Uruk was a large city, at a minimum 40,000 people,” says UCLA professor Robert Englund, one of the few experts on the Uruk documents. “So some of the quantities are very high - hundreds of thousands of pounds of barley, for instance” But here’s the really remarkable thing. The earliest Uruk tablets aren’t just the oldest pricing records ever found. They are the oldest examples of human writing yet discovered. In other words, when humans first took stylus to wet clay, the first things that they were compelled to record were . . . prices.

In the earliest commercial exchanges, goods or services were exchanged for other goods or services. For example, the price that a farmer might pay for a bolt of cloth could be a bushel of corn. This practice, termed barter, still goes on