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Pricing decisions made by an organization comprises part of its strategy to achieve an organizational objective. Myhomeworkhelp.com decodes management strategy for finance students with exclusive major factors that affect pricing decisions homework help. Strategies adopted by a firm determine its long-run sustainability and ability to generate revenue.
Both internal and external factors affect pricing decisions. Among internal factors, are lists following:
ย Cost
Fixed cost like rentals and variable cost like overheads comprise the total cost of producing a said commodity. The firm and individual seller must ensure they can recover both fixed as well as variable cost. Major factors that affect pricing decisions assignment help that we assist you with is the guidance that can be relied up on.
Goodwill of firm captured as intangible asset in balance sheet
Pricing decisions are largely affected by goodwill a firm or an individual enjoys in the market. For example, an established firm like Procter & Gamble or Unilever can afford to charge a higher price for their goods.
Product life cycle
This again is an internal factor as stated by major factors that affect pricing decisions homework help. You will charge a lower price when you introduce a product and service in market. As product captures a greater share of the market and grows in popularity, you are in a position to charge a higher price.
Credit period by organization captured in balance sheet under account receivables
We all are aware how we end up paying a higher price when we opt for EMI. This implies longer credit period, higher price and vice-versa. Cash payment often attracts a sizeable discount from the seller as it immediately brings a positive change in balance sheet.
Promotional activity or the expense incurred by the firm under marketing
Heavy promotional and advertisement activity means higher cost of product.ย ย Advertisement costs incurred by firms build up a brand of product and improves image of the firm. These costs eventually is recovered from customer in the form of higher cost of the product
Among major factors that affect pricing decisions assignment help, external factors are listed below
- Degree of competition in the market
With a highly competitive market, keep prices relatively low to capture a greater share of market. In a zero competitive market, a higher price will fetch greater revenue generation.
- Government control
Consider Government rules, regulations and taxation before zeroing in on a price. Some products has price pre-determined by government; you have in fact nothing to contribute in terms of pricing
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