ABSTRACT
Pricing decisions should take account of customers’ and competitors’ reactions. In the former case, customers will generally perceive price as an indicator of product or service quality and will normally evaluate the cost in terms of the perceived benefits derived from the consumption of the offering. In most cases, customers have the opportunity to choose from a variety of offerings and thus price will be one of a set of comparative indicators upon which the buying decision will be based. The better the firm can differentiate its product or service from those of its immediate competitors, the more the justification for commanding a higher price, provided that this differential advantage can be sustained.
