- Organizational factors and goals of the business
The goals of the business serve as a basis for the development of pricing strategy. Generally, the overall pricing strategy is decided by top executives. However, the actual mechanics of pricing are dealt with at lower levels, e.g., salesperson, and focus on the individual product or service.
- Cost of the product
Cost is the primary element in setting prices for a product or service. A business with low costs should have a better opportunity to increase sales and profit by lowering a product or service price.
- Product differentiation
Product differentiation is a key for businesses to introduce a new product or service to the market. The price of the product depends upon the characteristics of the product. The business can set a high price for the uniqueness of its product or service.
- Marketing mix
A pricing strategy must be implemented together with other elements of the marketing mix. The marketer must consider the total marketing mix when setting prices to match customer perceived value.