Factors that Influence Pricing

• Input costs: the higher the input costs, the higher the final price. (e.g increase in transport)
• Demand for the product: higher the demand, the higher production volume, the lower the input costs, the lower the final price
• Target market: the income level of the target market could influence the price of a product
• Type of product: luxury products can be priced higher
• Pricing technique used to determine the price: promotional pricing can be lower than demand-orientated pricing
• Competitive and substitute products: similar products that could replace a product, a high price might result in a loss of sales to the substitute. Price for complementary goods increase, the other product may increase at the same time (e.g computers and keyboards)
• The economic climate and availability of goods and services: If there is a shortage of a certain product, people are prepared to pay more for it.
• Forms of markets: Perfect competition (many buyers and sellers), Monopolistic competition (many suppliers/ sellers), Oligopoly( few suppliers and sellers), Monopoly (only one supplier/seller)