1. Product Cost :
The most important factor affecting the price of a product is its cost.
2. The Utility and Demand :
Usually, consumers demand more units of a product when its price is low and vice versa.
3. Extent of Competition in the Market :
The next important factor affecting the price for a product is the nature and degree of competition in the market.
4. Government and Legal Regulations :
The firms which have monopoly in the market, usually charge high price for their products.
5. Pricing Objectives :
Another important factor, affecting the price of a product or service is the pricing objectives.
6. Marketing Methods Used :
The various marketing methods such as distribution system, quality of salesmen, advertising, type of packaging, customer services, etc. also affect the price of a product.
The six stages in the process of setting prices are (1) developing pricing objectives, (2) assessing the target market's evaluation of price, (3) evaluating competitors' prices, (4) choosing a basis for pricing, (5) selecting a pricing strategy, and (6) determining a specific price.
