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Simply there are 3 major elements affecting strongly on product pricing:-
1) Product cost.
2) Market prices.
3) Target profit.
Pricing of the product is really a difficult and complex system. Some of the product pricing determinants are;
i. Product Life Cycle, for e.g, introduction, growth, maturity and decline stage.
ii. Nature (for e.g, elasticity) of the product.
iii. Market situation for e.g, competitive, monopoly
iv. cost of the product and shareholders expected rate of return.
* Survival - is the most fundamental pricing determinant and comes into play when the conditions facing the organisation are proving to be extremely difficult.
* Return on investment - Prices are set partly to satisfy the needs of the customers, but more importantly to achieve a predetermined level of return on capital investment involved.
* Market stabilization- the firm determines its prices in such a way that the likelihood of the leader relating is minimised.
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