To understand the logic of pricing in the modern economic system is much more difficult, what it was done before. Sometimes it seems that the price of the goods does not make any sense. However, this is the point of view of the buyer, and the position of the buyer, although it is one of the main forces affecting the price, is not able to fully explain it. The fact is that in modern conditions the company is forced to take into account all the numerous factors of pricing , when determining the most effective price in order to successfully maintain market positions.
There are several approaches to determining the underlying pricing factors. The classical economic school conditionally divides all factors into demand factors and supply factors. Demand is the desire and opportunity of the buyer to purchase goods at a certain price. In an ideal system, with rising prices, demand for goods falls. In turn, the offer is the ability and desire of the company to sell goods at the price N. The higher the price, the more goods the company will be able to deliver. By comparing supply and demand, you can find an effective market price.
Unfortunately, in modern conditions the classical theory is no longer able to provide a complete analysis. Therefore, today pricing factors are used, based on pricing conditions, which are an extended supply-demand model.
Pricing conditions are internal and external, respectively, and factors are divided into internal and external. Internal pricing factors are factors that are formed directly in the company itself. They are divided into two main groups: production conditions and marketing conditions. The first group, which includes such factors as costs, desired profit, payback point, etc., does not differ much from the classic market offer.
In turn, pricing factors, based on marketing conditions, pricing started to be taken into account not so long ago. This group includes subjective factors such as product policy, existing communication channels, promotion opportunities, etc. Using these factors allows you to choose the real price, taking into account, in contrast to the mathematical price, the so-called working moments.
The company, however, cannot proceed when setting the price solely out of its interests. Otherwise, she will not be able to stay in the market for a long time, because competitors will easily withdraw her from the game. Therefore, external pricing factors are even more important than internal factors.
External factors are also divided into two main groups: factors based on consumer behavior, and factors based on the behavior of competitors. The first subgroup is pricing factors, similar to classic demand, such as: utility of the goods, exchange of goods, etc. All this can be expressed on the graph using the consumer demand curve.
However, in conditions of fierce competition, the position of competing companies is more important than the desires and aspirations of the consumer. The policy of competitors in many cases is the main factor, since “price games” force the company to form its own price regardless of the short-term economic effect. Winning market share is more important than lost profits or even losses incurred by the company due to setting too low or too high prices. It is competition that sometimes makes prices truly inaccessible to the logical analysis of the buyer.
One way or another, all the pricing factors in marketing extremely important, and the lack of awareness of the leadership about any of them or its improper use in pricing can lead to disastrous consequences.