There are many things that come in to play when a product is priced. The price of a product plays a role in whether or not people will be interested in buying that product and most people are always looking out for the best price on whatever they are considering buying. Retailers need to keep in mind that consumers will most likely look for the price that is the most affordable and consumers will be more than happy to search for the price that suits them best.
Of course retailers what to make a profit, otherwise there would be no point in their business, so the price of a product needs to be right for both the consumers and for the retailers. But how is the price of a new product set? There are many things that stores take into consideration so that they can make profits and remain in business. Retailers need to pay their employees and they have other admin and rental expenses to pay, that is why it is important for them to make sure that their products are priced correctly. When setting the price of a new product the retailer must take in to consideration what it costs to get the product into the store. These costs include shipping and/or handling and also the amount paid for the product. But of course there are other factors such as operating expense of the business which includes marketing, office supplies, overhead and payroll. The price of a product then also includes the price you are paying for service and everything else you see in the store. In this case the price makers will consider all these costs before they can come up with the final price.
Once all these things have been taking in to consideration, the price of the product can be worked out and at the same time the retailer can work out how much profit to include and then mark up the price accordingly. A retailer will most likely want their prices to be competitive and the price of the product could either invite consumers or chase them away. The calculations can be complex; there are experts who deal with the setting up of prices, especially in bigger organizations and other manufacturing companies. Accountants and statisticians do all this kind of work.
Tips and comments
Of course some retailers will have goods that are way more expensive than others but due to the location and/or quality of their goods, they may feel that their prices are appropriate. They may also want to invite a certain caliber of consumers that will pay the high prices. All this requires the shop owners to do enough market research. The price of a new product therefore depends on a number of different aspects; location, manufacturing costs, labor and also the benefits of the product. if the product is being imported, it also means a higher price. Locally produced goods are much cheaper because there are no shipping costs and import duties to consider.