Price

Question 1

What is pricing?

Answer 1

It is the setting of the price for a product.

Question 2

Identify 3 factors to consider when pricing a product.

Answer 2

1. Customers
2. Costs
3. Competitors’ Prices

Question 3

Explain why customers should be a consideration when a business prices its product?

Answer 3

Customers are willing to pay more for products that they consider more valuable to them. Therefore a business should price its products according to how much its target customers are willing to pay.

Question 4

Explain why costs should be a consideration when a business prices its product?

Answer 4

Costs is the amount of money a business pays to buy or produce a product. Products are usually priced above costs to make profits.

Question 5

List 4 examples of costs of production of a business.

Answer 5

1. Material costs
2. Rental costs
3. Workers’ salaries
4. Costs to promote products

Question 6

Why is it important for a business to take into consideration competitors’ prices when deciding on the right price for a product?

Answer 6

Competitors’ prices guide a business in its pricing decisions. A business will set a price close to those of its competitors’ if their products are similar. However, a business may price its product higher if the product is seen different and has a higher value in customers’ minds.

Question 7

What are the 5 types of pricing techniques?

Answer 7

1. Product-line pricing