Factors 2B considered when setting price

We know that price is the amount of money charged for a product or a service or the sum of the values that consumer exchange for the benefits of having or using the department or service.
Considerable factors: A company's pricing decisions are affected by both internal company factors and external environmental factors. The below internal factors affect a pricing decisions.
• Marketing objectives
• Marketing mix strategy
• Cost
• Organizational considerations etc.
They are summarized in below:
• Marketing objectives: Before setting the price the company must decide on its strategy for the product. If the company has selected its target market and positioning carefully them its marketing mix strategy including price will be fairly straight forward. Company's objectives may be:
a. Survival
b. Current profit maximization
c. Market share maximization
d. Product quality
The above objectives are very considerable factors to determine a price. Because on the basis of above objectives pricing is different.
• Marketing Mix Strategy: Price is only one of the marketing mix tools that a company uses to achieve its marketing objectives. Price decisions must be coordinated with product design, distribution and promotion decisions to form a consistent and effective marketing program. Decisions made for other marketing mix variables may affect pricing decisions.
• Costs: The base of pricing decision is cost. The company wants to determine the price is such a way so that it is more than production cost, distribution and selling cost. So, we can say that cost is one of the most important factors for determining a price.
• Organizational Consideration: Management must decide who within the organization should set prices. Companies handle pricing in a variety of ways. In recent small companies prices are often set by top management rather than by the marketing or sales departments. In large companies pricing is typically handled by divisional or product line managers. So, we can say that organizational factors affect a pricing decision.
EXTERNAL FACTORS: External factors that affect pricing decision include
• The nature of market and demand
• Competition and
• Other environmental elements.
They are summarized below:
• The nature of market and demand: Where as costs set the lower of prices, the market and demand set the upper limit. Both consumer and industrial buyers balance the price of a product or service against the benefits of owing it. Thus before setting prices, the marketer must understand the relationship between price and demand for its product.
• Competition: The number of competitors in market affects a pricing decision. If the market is highly competitive them company select comparably less price. Again if the price is less competitive them company can determine comparably high price. So, competition affects a pricing decision.
• Other external factors: When setting prices, the company also must other factors in its external environment. Economic conditions can have a strong impact on the firms pricing strategies. Economic factors such as boom or recession, inflation and interest rates affect the cost of producing a product and consumer perceptions of the product's price and value.