Setting Price: Part 1

In the Pricing Decisions Tutorial we provided the foundation marketers use to make pricing decisions. We now turn our attention to the process by which marketers determine price with a two-part look at the process marketers follow when setting product prices.

The central point of theses tutorials is a five-step process for setting price. We want to emphasize that while the process serves as a useful guide for making price decisions, not all marketers follow this step-by-step approach. Additionally it is important to understand that finding the right price is often a trial-and-error exercise where continual testing is needed.

Like all other marketing decisions, market research is critical to determining the optimal selling price. Consequently, the process laid out here is intended to open the marketer’s eyes to the options to consider when setting price and is in no way presented as a guide for setting the “perfect” price.

In Part 1 we look at Steps 1 and 2 with our primary emphasis on the approaches to setting an initial price.
Image by Walmart Corporate

Steps in the Price Setting Process