DETERMINATE OF THE PRICE OF A PRODUCT
Cost of production is the major or one of the major factor to be considered before setting prices. In the case when the cost of production is high haven determine the cost of raw materials and cost of transportation down to the place of use or point of production. The certainly the price tagged of such product will definitely be higher than when the cost of production is low. Product cost refers to the total of fixed costs, variable costs and semi variable costs incurred during the production, distribution and selling of the product. Fixed costs are those costs which remain fixed at all the levels of production or sales.
Price of a product is one of a crucial and important part of demand of product. Demand are triggered by price as well. The theory of demand state that the higher the price the lower the demand and the lower the price the higher of demand of the product. As a producer there are several factors consider when setting the prices of product, so that there will not be losses or in balancing.
Price determinate are various factor put into consideration before placing price on product. As a professional business persons, organization or company prices are not just place or set base on choice, want or anyhow, there are several factors that must be put into check before setting prices.Putting those factors into consideration we be able to set a better price that will of great benefits to the organization and customers as well.
DETERMINATE OF PRICE OF A PRODUCT
Competition level: As a producer you have to consider the level of competitive you have to set your price. Competition level is another important factor affecting the price for a product, a producer can set any price for its product if the competition level is low. However, when the level of competition is very high, the price of a product is determined on the basis of price of competitors’ products, their features and quality.
Marketing: When considering market as a determinate factor in setting price for a product we speak of location and medium by which the product will reach the buyer or customer. How close the product is to the customer determine the challenge of distribution and location determine the means of advertisment. The various marketing methods such as means of distribution , advertising, type of packaging, customer services, etc. also affect the price of a product.
Government: The government factor here has to do with the various laws and boundaries the government is likely to place and the taxation level. The firms which have monopoly in the market, usually charge high price for their products.
Rate of Demand: Your demand level of your product or service must be out into consideration before setting price. The rate at which customer and consumer make demand for a product can prompt the producer to either increase or reduce the price of his product. When the demand level is high the price will increase and when the demand is low the price will reduce, vice versa.