The decision of what price to charge for your product or service has a major influence in several important areas, which include the following:
- Profit: The price you select determines how much profit you make.
- Recouping your investment: The price at which you decide to sell your product or service determines how quickly you are able to recover the investment you made in developing and marketing your product or service.
- Resources available for promotion: Your price helps determine the amount of financial resources you have at any given time to compete in the marketplace.
- Ability to penetrate a new market: The price you select determines whether you are successful in getting your product introduced into a new market.
- Image: The price you select creates an image of the product and of your business. A high price usually implies status and quality. A low price may imply economy or value, but be careful as it could also imply low quality.