- Customer expectations
In reality, the customers are the final authority who determines the price of a product or service. These benefits or value can be assessed from two fundamental perspectives of customer needs: the need for product function and the need for the pleasure of using the product (Aulia, Sukati, Sulaiman, 2016). The use of the concept of customer perceived value creates more satisfied customers and directly affects customer repurchase activity.
- Price elasticity of demand
The marketer must understand how sensitive demand for a good is compared to changes in other economic factors, such as price. The price-demand relationship varies for different markets, e.g., pure competition, monopsony, oligopoly, and monopoly. Therefore, the marketer must understand the price-demand relationship for a product and service before setting prices.
- Suppliers
Suppliers of raw materials can have a significant effect on the cost of a product. The scarcity or abundance of raw materials also determines pricing. Therefore, the business must implement supply-chain management to minimize the right from suppliers.
- Competition
Competition is an important factor in price determination, especially for commodities. All competitors generally charge indifference prices. How much business is constrained by competitors’ prices usually depends mainly on product differentiation. Generally, pricing strategies must inevitably be wisely adopted concerning future competition.
- Economic condition
Economic history tells us that the boom and bust cycle is a key characteristic of capitalist economies. The cycle is a process of economic expansion and contraction that occurs repeatedly. During the boom cycle, the economy grows, and jobs are plentiful; otherwise, In the subsequent bust cycle, the economy shrinks, and people lose jobs and money. Therefore, pricing strategies must be applied concerning the economic cycle.
- Government laws and regulations
The government endorses laws and regulations to protect people in the country. Government involvement is essential in a capitalist economy to maintain social efficiency and equity. Marketers need to be aware of laws and regulations that influence how price is set in the markets. Recently, more regulations focus on healthier and environmentally friendly issues; therefore, businesses should engage these issues by introducing and advertising their green products and then raising prices in order to promote a higher customer-perceived value for the product. Hence, proper implementation of pricing strategies will benefit both businesses and customers in developing long-term customer relationships (Mandal, 2019).
- Unexpected situations such as the recently COVID-19 pandemic
Finally, unexpected situations such as the recently COVID-19 pandemic have a big impact on the economy worldwide. Short-term pricing strategies may need in times of crisis. However, it may have long-term impacts. The most flexible businesses initiate practices during the downturn to prepare themself to succeed when the economy recovery. Some pricing strategies such as lower a price should be used carefully in order to prevent business engages in the price war game.