Determination of the price should involve
- the cost of acquiring or producing the product or service
- all additional costs (e.g., rent, taxes, labor, insurance)
- the price charged by competitors for an equivalent product or service
- the anticipated/projected profit from the sale of the product or service.
Process/Skill Questions
- Why is pricing important to the business?
- How do businesses determine a price for a product or service?
- Why is it important to be aware of the target market when determining the price of an item?
- How does originality and quality affect the price that can be charged for a product or service?
- Does a high price always mean high-quality merchandise? Why, or why not?
- Why is it a good idea to check competition before setting prices?