Pricing

Price is the amount the consumer must pay for the product or service. Price means something different to consumers than the sellers. The consumers view the price as what they have to give up to receive the product or service. The seller views it as the revenue they will receive. The first step in price planning is to develop pricing objectives. There are different types of objectives, depending on what you want to do. The next step is to estimate demand, which is based on previous sales, test marketing and other things. Demand can either be elastic or inelastic, depending on how other factors affect it. The third step is determining costs. Costs can be fixed or variable. The next step is to evaluate the pricing environment, where the price is adjusted depending on cost and competitor's prices. The fifth step is choose a pricing strategy. There are different pricing strategies depending on the company's goals and needs. The last step is to develop pricing tactics. This is where how to charge, bundle and discount is decided.