Can You Identify And Define Other External And Internal Factors Affecting A Firm's Pricing Decisions?


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amber Jhon answered
Internal factors which can affect the pricing decisions of the company include suppliers, employees efficiency, profit margin, production cost and other expenses, brand image and expectations of the company. Suppliers provide the raw materials to the company and good relations with suppliers can make the company to buy quality products at reasonable prices. Employees' efficiency can also reduce the costs of the company and company can charge lower prices. Product cost also determines the prices of the products because all of the companies have to cover up the product costs. Moreover, image of the company also plays an important role in the price decisions of the company because a global brand will usually charge premium prices.

On the other hand, the external factors include government policies, competitors' prices, costs of raw materials, consumers expectations and demand and supply of the product. Government sets the price floors to save the interest of the borrowers and the sellers, therefore, government policies should be also take into consideration. Expectations of the consumers or consumer reservation prices are also considered in the price decisions. Costs of raw materials in the market also determine the pricing strategies. Moreover, the prices offered by the competitors can also impact the pricing decisions of the company.

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