How to determine the price level?
- Cost plus pricing
- Used mainly by manufactures, assures that all costs (fixed and variable) are covered and includes a desired level of product.
- Demand pricing
- Used by companies that sell their product through a variety of sources at differing prices based on demand
- Competitive pricing:
- Price according to your competitors. Used in competitive markets with little product differentiations.
- Number of competitors
- Mark-up pricing
- Adds a level of profit to the cost of the product being retailed. Also good for products that are co-packed.