Accounting technicians scheme west africa
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- C.7.1 Basic Rules of Pricing
- C.7.2 Pricing Objectives
- Profit Maximization
| C.7 Pricing According to Hoffman, et al (2003) price is a monetary value charged by an organization for the sales of its product. Nwokoye (2000) defines price as the amount of money needed to acquire a given quantity of goods and services. Oladele (2007) price is the value that one puts on the utility one receives from products and services. Price takes various forms admission fee, tuition, salary, rate, fare, premium, donation, dues, honorarium, retainer, and interest. Whatever forms it takes, it determines the quantity of the product the organisation will sell and the revenue that will be derived from the sale of the products. It also influences consumer behaviour. The value the average consumer attaches to a product depends on the price put on it. He might consider a lowly priced product as inferior, but attach high quality status to a highly priced product. In the next two sections we shall discuss pricing methods used by most organisations. C.7.1 Basic Rules of Pricing Generally, marketing organizations are guided by the following basic rules insetting prices. i) All prices must cover costs and profits. Price = Cost + Profit ii) The most effective ways to lower prices is to lower costs. iii) Review prices frequently to assure that they reflect the dynamics of cost, market demand responses to the competition and profit objectives. iv) Price must be established to assure sales. That is to help to generate sales, C.7.2 Pricing Objectives Settings price for product to help in the development of marketing strategies begin consideration of objectives. Pricing objectives areas follows. ab Survivalb: A fundamental pricing objective is to survive in the marketplace due to overcapacity, intense competition and change in consumer wants. b) Profit Maximization: In maximizing profit, one way they can do this is to set right prices for their product that will generate turnover that can ensure return on investments. c) Market Share: Organizations enter market with either low price in other to penetrate the market thereby increasing market share or they enter the market with high price in order to establish market leadership and sustain market shared) Cash Flow: Some organizations set prices to recover cash as fast as possible. Financial managers are interested in the quick recovery of funds spent in the development of the product hence the need to set prices that will be attractive to the market. e) Download 3.37 Mb. Share with your friends:
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