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- Explanation for step 2
- Customer Demographics: Understanding target audience is critical in determining pricing strategies. Customers with higher incomes may be willing to pay a premium price for a product, while those with lower incomes may be more price-sensitive.
- Competitors' Prices: The prices of competitors' products can also impact sales. If prices are significantly higher than competitors', customers may opt to buy from them instead.
- Product Differentiation: If product has unique features or benefits that set it apart from the competition, the seller may be able to charge a higher price. However, if product is similar to others on the market, the seller may need to set a lower price to compete. How Price Impacts Sales Discussion Paper
- Production Costs: The cost of producing product is another factor to consider when setting prices. If production costs are high, the seller may need to charge a higher price to make a profit.
- Sales Volume: Increasing sales volume can help offset lower prices. If the seller can sell a large volume of products, the seller may be able to offer lower prices while still making a profit.
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