It is the one of most important job for the management or the authority to set the price, a price in which both of the parties the producer and the consumer should be satisfied also keeping an eye on the supplier and government also.
Price is set by the cost, adding the markup or profit with let us show you in formula that
Price = Cost + Markup or Profit
Price is an amount of money which is charged for the service provided or rendered in shape of a product or any service, product like Soap, Machinery, or any tangible thing and the services can include the Doctor’s Checkup, Barber’s Hair Cutting, Lecture by a Professor or anything which is intangible.
It is an amount which possess some value that consumer exchanges for the satisfaction or benefits that consumer have or use the products or services, Price is an exchange of two values, product by the seller and the amount by the buyer both have some value which posses the satisfaction for both the parties.
The Price is determined by assessing the price factors which can be the cost of product which occurs on the manufacturing, the demand for the product in the market, the purchasing power of the public in a specific area, and the government policies regarding the fixation of price.
A cost during the manufacturing of a product suppose a product “Cake” the making of caking, ingredients of the cake, profit for the owner, wages of worker, utilities etc are kept in mind and are adjust with the price charged for a Cake.
The butter, eggs, sugar, flour, baking soda and other material is mixed than the final product of cake is came into being the tiny costs occurs on each ingredient is wholly charged from the customer.
A worker working in a baker’s shop than the utilities like gas, electricity, which are consumed at the spot of cake making is charged with the price.
Once the Product is made the other factor government policy regarding that product, the tax levied on that product than the purchasing power of the market customers is also kept in eye while fixing the price.
For the market whose customers are rich their purchasing price is high at that market the quality is not compromised by the producer as they pay high rates to the producers but for the market whose purchasing power of customers are not so good they are compromised with the quality of products.