ABSTRACT
The price established should be the value customers place on the product or service. Basically, the price should be determined by the customers and be what they are willing to pay. If the price is set too high, revenue will be affected adversely by lower sales, causing profits to be smaller than expected. If the price is set too low, profits can also be lower than what is possible because the profit margin per unit will be reduced. Of course, the price elasticity of demand, production capacity, and costs will have an impact. However, in either event, an incorrectly set price will most likely have undesirable profit consequences.
