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Factors Affecting Pricing Decision

For the remainder of this tutorial we look at factors that affect how marketers set price. The final price for a product may be influenced by many factors which can be categorized into two main groups:

  • Internal Factors - When setting price, marketers must take into consideration several factors which are the result of company decisions and actions. To a large extent these factors are controllable by the company and, if necessary, can be altered. However, while the organization may have control over these factors making a quick change is not always realistic. For instance, product pricing may depend heavily on the productivity of a manufacturing facility (e.g., how much can be produced within a certain period of time). The marketer knows that increasing productivity can reduce the cost of producing each product and thus allow the marketer to potentially lower the product’s price. But increasing productivity may require major changes at the manufacturing facility that will take time (not to mention be costly) and will not translate into lower price products for a considerable period of time.
  • External Factors - There are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market.

Below we provide a detailed discussion of both internal and external factors.

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10 Comments

  1. apaar makes this comment

    July 14, 2011

    Nice explanation of this topic. Thanks.

  2. SAJID makes this comment

    June 27, 2010

    Excellent explanation of factors affecting the pricing decision.

  3. RICHARD makes this comment

    May 29, 2010

    I find this site very exciting and urge all in marketing to advantage of this.

  4. Support @ KnowThis makes this comment

    May 04, 2010

    For sourcing this information it is best to credit it to the website KnowThis.com.

  5. pete makes this comment

    May 04, 2010

    This is excellent thank you very much but I really need to know who is the author of this?

  6. antony makes this comment

    May 03, 2010

    Excellence

  7. uzma makes this comment

    April 01, 2010

    Hello, I just want to say thanks for this report. It does help me in my writing of my assignment.

  8. sanad makes this comment

    February 05, 2010

    Hello shuma, I hope you are speaking only about the internal factors affecting pricing decision...As explained above, its only of the attribute that can be considered if a manufacturer want to reduce the price, but it doesn't mean if you increase production quantity price can be reduced. How external variable affects internal can vary from company to company and the environment in which company is working and its associations with various kinds of suppliers and customers...

  9. shuma makes this comment

    October 23, 2009

    I found an interesting answer on the issue of factors affecting pricing decisions.Thank you! But,let me ask you, why suppliers don't affect pricing decision? The more the raw material, the more products can be produced.

  10. haseebt makes this comment

    September 15, 2009

    excellent

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