Business Price

How To Determine If the Price Is Right

Introduction

Determining if the price is right for a product or service is not a very difficult task. As a consumer it is your right to know whether a product or service is priced correctly. You want to make sure you pay a fair price and not lose in any way. So how do you determine if the price is right? There are many practical ways of doing this and following are some of the things you can consider.

Step 1

The first way to determine if the price is right is by looking at the quality of the product you are buying. Quality usually goes hand in hand with price, consumers are prepared to pay a slightly higher price for quality goods. This applies to things like clothes and electrical goods. If you are buying clothes look at the fabric material and the general quality of the pair of jeans for example. You will find that quality and original fabric material is usually a bit more expensive than cheap quality materials.

Step 2

Before you buy something compare the price being charged from at least three different suppliers or shops. The price for one product must not be very different. If it is way off, then you must always go for the cheapest. Some shops charge high prices because of their location and because of their name. Do not always buy before you compare prices. Price comparison is one effective way of determining if the price is right for a specific product.

Step 3

This also applies to services, take bank charges or insurance premiums for example. You can only determine if the price is right by comparing prices between different banks or insurance companies. In most cases, there is a standard rate that the banking industry or insurance industry will put. Companies will use this rate when they price their products, so when you choose you must have this in mind. The price is right when it is not too way above or below the industry standard rate.

Step 4

You can also tell if the price is right by comparing the wholesale price and the retail price. Retailers buy their goods from wholesalers at a slightly lower price. The mark up that they put on different goods will be different. If the mark up is too high, then it is a sign that the price is not right. In some countries, retailers that charge too much prices, are reported to the Consumer Council.

Step 5

To determine if the price is right you also look at the manufacturing price. Wholesalers buy from manufacturers and put their mark up. So this is a whole chain. The manufacturing price, which includes raw material costs and other overhead costs, will determine the final price of the product.

Tips

At the end of the day everyone wants to pay the right price for the goods they buy. Don’t rush to buy things you are not sure about. Always make sure the price is right. Take time to compare prices of goods in different shops. These are some of the things that will help you to determine if the price is right.

Sources and Citations

marketing.about.com/cs/advertising/a/pricingstrtgy.htm

economics.about.com/cs/finance/a/pricing_info.htm

By Judx1 Writer2009, published at 03/06/2012
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