price
If a company is to sell a new product it has developed, choosing the correct price is vital.
If the price is set too high it may be more than the product’s target customer can afford, more expensive than similar products sold by other companies, meaning that few will be sold. However, if it is set too low, the company will make less profit and customers may think that the product is inferior to similar products at a higher price.
There are many different pricing strategies, and some companies use mark-up pricing to decide the price of their product. This means they take the average cost of making each product and add on a percentage of the price as profit.
The percentage added will depend on several factors, for example how much other companies charge for similar products and the image of the product. If a business has developed a product that they want to have a luxurious feel, seem exclusive and special, it is likely to have a higher price.
