Discussion questions week 10. Items to consider when establishing the price of an offering

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Discussion Questions
Items to consider when establishing the price of an offering
Pricing is an important aspect in the creation of an effective image for the brand in the market. Price is one thing which the consumer notices about a product and is a deciding factor when it comes to their decision on purchasing a product or not. The prices set should be able to cover both the direct costs, material and also the labor which went into producing the item and all the indirect costs. The direct costs usually make up a fairly consistent percentage of the prices that are charged. Before setting the prices of an offering an organization is required to do research to find out what their competitors are charging (Sako, 2016). After the research the company should now consider how they want to set their product apart from the competitors offering. The most important items that should be considered in establishing the prices include:
Costs
Before setting up the prices of an offering it is important to know the costs that are incurred in running the business. In pricing the first step is that you must cover your costs and then consider the profit. Once you calculate the costs for producing the service or product it is advisable to set the prices higher that the variable costs so that the company can be able to make profit.
Level of demand
The demand for your product or services will always have a great influence on the prices that are set. The higher the demand of the product the higher that you can price...