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

Explanation

Factors Affecting Price Determination

A company has to keep in mind various factors while determining the price of a product. Some such important factors are given here.


`1]` Cost of the Product:
The most important factor affecting the price of a product is the product cost. The price of the product must be able to cover the total cost of product.
Total cost means fixed cost and variable cost.Fixed cost are fixed irrespective of production level,e.g.,rent of factory.The variable costs vary with production,e.g.,cost of raw materials.

`2]` The Demand for the Product:
Another factor is the demand of product or service when demand if the product is inelastic,i.e.,no or very less substitutes are available then company can fix up high prices.
Whereas when demand is elastic i.e.,more substitutes are available then price has to be brought down.

`3]` Price of Competitors:
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