Question

Which of the followings factors is most important to consider when setting your pricing structure? A. Charging only wealthier customers higher prices B. Deciding what you want your annual income to be C. Comparing prices set by your competitors D. Establishing a 100 percent markup rate for every design?

Answer 1

Answer: C. Comparing prices set by your competitors

There are five factors to consider in setting price structure:

1) costs 2) customers 3)positioning 4) competitors and 5) profit

We are not considering customers if we will charge only wealthier customers higher prices. In the same way with profit, we cannot always establish a 100 percent markup rate for every design. Your target annual income is not the most important factor also. You need to compare your price to the prices set by your competitors.