“Is the right price a fair price?”

Introduction What is price? It can have many definitions depending on the industry, product or service you are providing. Price is the amount of money charged for a product or service however price is an important element in the marketing mix. Price is the sum of all the cost that consumers exchange for the benefits of having or using the product or service. Companies has an obligation to itself, its shareholders and its consumers to determine the optimal price that results in sustained availability and results. Many companies are thinking that the lowest price is the best price but it depends on the product or service. Price itself can create a value perception and some companies on purpose increase their prices above their price parity competitor offerings and this creates a niche type market.
Steps in Setting Prices The most important aspect to consider when setting price is customer value. When customers buy something, they are exchanging something of value in order to get something of value. In order for value to be received the benefits of the product or service must out-weigh the stated costs associated with the product or service many internal and external factors affect price. Internal factors include the firm’s marketing objectives, marketing mix strategy, and organizational factors. External factors that influence pricing decisions include the nature of market and demand, competition, and other environmental factors like the economy, reseller needs, and government actions. In the end, the consumer decides whether the company has set the right price. If companies set their prices too low or to high there is a possibility that they will scare customers away. You may build an impression that your products or services are inferior. Or, just as bad, you might not be making enough profit to support your