State any four factors which affect the determination of the price of the product.

Explanation

Factors affecting price determination
1. Product cost- One of the most important factors affecting the price is its cost. It includes cost of producing, distributing & selling the product.
2. Utility& Demand- The product cost set the lower limit of price, the utility provided by the product &intensity of demand of product sets the highest price of the product.
3. Extent of competition in the market- when firm does not face any competition it has complete freedom in fixing up the price. But when competition is more the price of the product is fixed keeping in mind the competitor’s price.
4. Government regulations- In order to protect the interests of the consumers government has all rights to control prices of important commodities & services.
5. Marketing methods used- The price of product is also affected by the methods & techniques used to promote the product.
6. Pricing objectives- Apart from profit maximization other objectives are-
a. Obtaining market share leadership-If firm wants to capture big share of market it has to keep its price low.
b. Surviving in competitive market- To survive in a competitive market the firm has to offer discounts.
c. Attaining product quality leadership- Generally high prices are charged to cover cost of R&D.