Internal factors in governing prices

Question

What are the internal factors in governing prices?

Answer 1

These are the factors that are within the control of the organization. Different internal factors are as given below:

1. Cost: The price should cover the cost of production with materials, overhead, labour and administrative as well as selling expenses and a reasonable profit.

2. Objectives: whereas fixing the price, the firm’s objectives are to be considers.
Objectives might be maximum sales, stability in prices, targeted rate of return, raises market share, preventing or meeting competition and projecting image.

3. Organizational factors: It is internal arrangement of the organization. Organizational mechanism is to be use in consideration whereas deciding the price.

4. Marketing Mix: Another element of marketing product, mix, place, promotion, politics and pace are influencing factors for pricing. Because these are interconnected, vary in one element will affect the other.

5. Product differentiation: Individual of the objectives of product differentiation is to charge higher prices.

6. Product life cycle: At different stages in the Product Life Cycle, different strategic pricing decisions are to be adopted, for example. In the introduction stage generally, firm charges lower price and in development stage charges maximum price.

7. Characteristics of product: Nature of durability, product, accessibility of substitute and so forth will also affect the pricing.