– Total Costs – are the sum of the fixed and variable costs for any given level of production.
People Involved With Pricing – Management must decide who within the company should set prices.
– Product-Quality Leadership – A company might decide it wants to have the highest-quality products on the market.
This however, usually entails charging a higher price to charge for the higher quality and extensive R&D.
– In small companies, the top management often sets prices.
– However, in larger companies, pricing is typically handled by divisional or product line managers.
– Oligopolistic Competition – a market in which there are a few sellers who are highly sensitive to each other’s pricing and marketing strategies.
– Pure Monopoly – A market in which there is a single seller – it may be a government monopoly, a private, regulated monopoly or a private non-regulated monopoly.
– Current Profit Maximisation – A lot of companies want to set a price that will maximise current profits.
They estimate what demand and costs will be at different prices and choose the price that will produce the maximum current profit.