Answer:
COST, PROFIT, DEMAND FOR PRODUCT, GOVERNMENT REGULATIONS AND COMPETITORS.
Explanation:
Pricing settings is the most essential part of every business as it goes a long way in determining the sustainability of the business. When the price is too high/low, there are great chances that the product will fail in the market.
When setting price, the following are the basic factors to be considered:
a) COST OF THE PRODUCT: This is total cost involved in the production of the product which include fixed costs (the expenses that will come in every month regardless of sales) and direct costs (the expenses incurred by producing and delivering your products and services).
So, when determining price, this should be considered so as to set the profit margin to the level which will not make the company run at loss.
b) DEMAND OF THE PRODUCT/SERVICE: This is equally important when setting price, you should understand the demands of your potential customers by knowing what they want and how they want it. Their preference will let you know if they prefer cheap items or they rather want value for their money.
c) COMPETITORS: When setting price, it is important to take a check with your competitors to know what they charge for their product, the level of services offered, the items involved in their productions. All these will give you a better edge in setting your price.
d) GOVERNMENT REGULATIONS: This has to do with the regulations/laws imposed by the government as regards pricing of products. You consider this when setting your price.
e) PROFIT: Every private business sole aim is to maximize profit. so after asking the question of how much returns needed to make by your company, you then set your pricing standard in a way which will yield returns(PROFIT).
