Pricing of Product or Services

• Determination of pricing of product or services can be a difficult task because if you set your prices too high, you might find your customers purchasing from you, however, you can also affect your profits if you set your prices too low.
• Successfully achieving the right price can also help you position your business/products within the market and meet profit target, so it's important to consider pricing as part of both your finance and marketing strategies.

Some external factors for pricing:

• Price sensitivity in the market- Price Changes v/s Customer Demand
• Level of Demand- Low or High
• Level of competition
• Government Regulations

Pricing Objectives:

• Profit or Cash Flow targets
• Sales Target
• Positioning of Product
• Remain Competitive
• Increasing Demand

Calculating the Price:

• Before you calculate your price it's useful to calculate how much it costs to manufacture or deliver your product/service. When coming to a figure, always consider the cost of producing your product or service as well as your fixed and variable costs. Don't forget to also think about Goods and Services Tax (GST) and other relevant taxes in your costing.