Tag: prices and cost of living

Refers to the simplest method of determining the price of a product. In cost-plus pricing method, a fixed percentage, also called mark-up percentage, of the total cost (as a profit) is added to the total cost to set the price. For example, XYZ organization bears the total cost of Rs. 100 per unit for producing a product. It adds Rs. 50 per unit to the price of product as’ profit. In such a case, the final price of a product of the organization would be Rs. 150.

Total cost refers to the total expense incurred in reaching a particular level of output; if such total cost is divided by the quantity produced, average or unit cost is obtained. A portion of the total cost known as fixed cost—e.g., the costs of a building lease or of...

Here are some of the various strategies that businesses implement when setting prices on their products and services.

• Pricing at a Premium. With premium pricing, businesses set costs higher than their competitors.
• Pricing for Market Penetration.
• Economy Pricing.
• Price Skimming.
• Psychology Pricing.
• Bundle Pricing.

Factors that must be considered while designing pricing strategies are :-

• Price of competitors.
• Strategies of competitors.
• Marketing strategy

Value and capital is written by John Richard Hicks in 1939. This book focuses on the microeconomic theory. It aims to establish market equilibrium of the goods demanded in the economy using ordinal utility approach.

Price deals mainly refers to reduction of the price of a product from its original MRP in order to maximize the sale ,as we know when the price of a product gets lower ,demand increase and thus the sales rise.

There are certain factors which govern the prices. Internal and external factors. Internal factors are the ones which are caused internally in the organization due to certain policies set by the firm. Thus the cost and management policies influence the prices. 

The main element in the price-setting process of a product is the cost data of the product. This is because for any producer, it is first important to cover up the cost of making the good and then add a profit margin to set the appropriate price. Thus, it is important to cover the cost so that the firm does not incur a loss.

At the time of barter system, commodities were exchanged for commodities. But after the introduction of money, the concept of opportunity cost came up where the real value of a commodity is measured in terms of the next best alternative that needs to be sacrificed to buy the commodity.