Price and Pricing: Price is defined as the amount we pay for goods or a service or an idea. Price is the only element in the marketing mix of a firm that generates revenue. All other elements generates only cost. Price is a matter of importance to both seller & buyer in the market place. Only when a buyer & a seller agree on price, we can have exchange of goods and services leading to transfer of ownership.
The term ― Price need not be confused with the term ― Pricing.
Price is the value that is put to a product or service and is the result of a complex set of calculations, research and understanding and risk taking ability. A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors.
Objectives of Pricing
A business firm will have a number of objectives in the area of pricing. These objectives can be short term or long term or primary objectives:-
1. Profit maximization in the short term.
2. Profit optimization in the long term.
3. A minimum return on investment
4. A minimum return on sales turnover.
5. Achieving a particular sales volume.
6. Achieving a particular market share.
7. Deeper penetration of the market.
8. Entering new markets.
9. Target project on the entire product line.
10. Keeping competition out, or keeping it under check.
11. Keeping parity with competition.
12. Fast turnaround & early cash recovery.
13. Stabilizing price & margins in the market.
14. Providing the commodities at prices affordable by weaker section.
15. Providing the commodities at prices that will stimulate economic development.