In the market economy the business success of any company or entrepreneur mostly depends on the correctly chosen strategy and tactics of pricing on goods and services. Pricing is a rather difficult process because prices mostly depend on the situation in the market. The range of political, economic, psychological and social factors has a great influence on the price level. Today your price can be determined by the costs factor, and tomorrow its level will depend on the customer’s behavior.
However, nowadays the most part of entrepreneurs of our country has no necessary theoretical and practical knowledge of the complicated mechanism of goods and services pricing. As a result, establishing prices they often make serious mistakes that immediately reflects on the financial results, in some cases leads to suffering losses and sometimes even to the bankruptcy of a business (company).
To avoid this situation any economist and any entrepreneur must acquire the theory and practice of pricing.
All commercial and nonprofit organizations face the problem of determining prices for their goods and services. In the market economy pricing is a very difficult process which is influenced by plenty of different factors and based not only on the marketing recommendations. But nevertheless, the right choice of price strategy, approaches to the pricing for new and still manufactured goods and services in order to increase volumes of realization and commodity circulation, to enlarge production and firm the company’s positions in the market is one of the marketing functions.
Prices and the price policy are ones of the major components of the marketing activity, which importance is permanently rising in our days. Prices are in close dependence on other variables of the marketing and other firm’s activities. Final commercial results mostly depends on prices and it’s important to mention that in the long run correct or fault price policy brings positive or negative results of firm’s activity.
The essence of the correctly chosen price policy in the marketing is to fix and vary prices in dependence on a situation in the market in order to win a certain market share, provide the planed profits and solve other strategic and operative tasks. Working out the general price policy all decisions are gathered into an integrated system.
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