Price - Marketing Mix (BBC Bitesize Revision GCSE)

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Business Studies

Price

A business must take many factors into account before deciding on the price of a product.

Pricing strategies

Remember there is a big difference between costs and price. Costs are the expenses of a firm. Price is the amount customers are charged for items.

Firms think very carefully about the price to charge for their products. There are a number of factors to take into account when reaching a pricing decision:

A sign showing clothes prices in a shop window - jacket £30, tee shirt £12, jeans £20 and shoes £38 (http://www.bbc.co.uk/schools/gcsebitesize/business/images/prices.jpg)

  • Customers. Price affects sales. Lowering the price of a product increases customer demand. However, too low a price may lead customers to think you are selling a low quality ‘budget product’.
  • Competitors. A business takes into account the price charged by rival organisations, particularly in competitive markets. Competitive pricing occurs when a firm decides…

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