ABSTRACT
This chapter explores why it is necessary to understand how price represents the exchange of money for value; what effect does the difference between fixed and variable costs have on the pricing decision; what are some pricing methods that can help determine the product price; how do other unique challenges affect the decision of how to price products; and what pricing strategies are available to increase sales. Trying to have the lowest price does not guarantee business success because profit does not depend on the number of items sold. Different consumers will be willing to pay either more or less for the product based on their level of desire. After an overall strategy has been determined, there are three primary methods to set a price. First, the price can be based on variable and fixed costs. Prices can be based on what competitors charge. Finally the price can be based on the customer’s perceived value of the product.
