5 Factors in Pricing Objectives

Objectives are really very important for all organizations. Because of objective states that what we want to do next. There are five factors in pricing objectives.

  1. Survival
    Price is depending on the objectives of the business. These objectives may change situation to situation. Then the sellers also change their pricing.  There are some survival situations in which sellers need to change their pricing. Let’s see-
  •  There exist fare competition among producers
  • Some producers have identical products
  • If the country faces inflation( inflation increases the cost which affected the price)
  • If the country faces natural calamities like earthquake, flood, famine, etc then producers need to reduce their pricing.
  • Sometimes, the artificial crisis may be created by dishonest producers.
  • War ( war may be taken place between countries then market set price as survival)
  1. Maximize market share

    The market penetration helps to maximize market share. The market penetration refers to capture more customers by offering lower price of their product initially. Through this way, they are able to grab a huge market share. As their product contains low price, customer demands are increasing day by day. When these products get acceptance by the customer then they increase the price of their product step by step. This way the producer’s product can exist in the marketplace for a long time. However, when they produce a lot of goods, their production cost will decrease.
  2. Maximize current profit

The market skimming helps to maximize current profit. The market skimming refers to capture more customers by offering the innovative product in great quality. That’s why they charge a higher price initially.  At the first stage, they maximize their current profit. But gradually they reduce the price of their product to capture more customers. This is possible when there are a number of buyers are able to buy it.

  1. Product quality leadership
    Some marketers trend to say product quality leadership. This means that some products have great quality. This can satisfy the customer more. For example, the iPhone. This phone price is more because of its innovative quality. The consumers also buy this because it associated with their emotional attachment, social class, and status.
  2. Others

    There are some other issues like-
  • If anyone wants to do the welfare of the society, it can charge below pricing
  • It depends on the particular market

Ethics in pricing

The price setting process may produce conflict with social values. This is because marketer wants to achieve a higher profit at a limited cost.  Besides, consumers also want the best value at a lower price. This creates conflict with each other. The higher price always needs to maintain higher commitment over the product as well as quality.

On the other hand, low price suggests less quality of the product. Then sellers try to convince buyers at a low price. There are some instances where pricing may be questioned are-

  • The higher prices in a product line don’t justify value increase
  • The branded product is a considerably higher price than the generic products.
  • There is a disproportionately high price for replacement parts
  • The price of the new product is higher than the existing product.


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