Business Price

How Is Price Determined For New Products?


How is price determined for new products is often a question that consumers have on their minds. Of course a retailer needs to make a profit on the goods that are sold or else the business would go bankrupt. There are so many factors that determine the price of products. One of the main things that retailers look at is the quality of the product, if a retailer believes that his/her product is superior to another, they may feel that marking up their product is justified.


Manufacturing, shipping and handling is also a factor when it comes to pricing a product as the retailer would have to pay for all that. And the cost of operating a business such as marketing, overhead, office supplies and payroll is included in the expenses which will be added to the pricing of the product. In other words the price of a product also includes the price you are paying for services and everything else you see in the store. Shipping for example involves a lot of transport costs especially if the products are being imported from another country. Manufacturing costs is another factor that retailers use to determine the price of a certain product, the raw materials and the processes that are used when making the product are also considered when coming up with the final price. there is also labor costs to consider and this will contribute greatly to the final price that the retailer charges at the end of the day.


Competition also plays a large role in how the price of a product is determined because a store does not necessarily want to have the highest prices around because consumers may prefer to search for the more affordable prices to suit their budget. A retailer will attempt to get their price as close to the maximum that the consumers might be willing to pay. If you are still asking ‘so how is price determined for new products?’ then you need to ask yourself ‘how much are you willing to pay for a certain product’. These are some of the questions that producers and manufacturers also take into account when they price their products.

Tips and comments

Once all these factors have been taking in to consideration, the price of the product can be calculated and that is also the time when the retailer should work out how much profit he/she wants to make on the product and then mark up the price accordingly. As a consumer these are some of the things to keep in mind when wondering how is price determined for a new product and if you are a new retailer, these are some of the things for you to keep in mind when determining the price of a new product. the factors to consider depend on the manufacturer concerned, but at the end of the day you find that most producers and retailers are just after making a profit. How a price is determined depends on a variety of things as explained above.

By Judx1 Writer2009, published at 02/14/2012
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