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How to determine the price level

The price of the goods is affected by internal and externallimitations. Internal costs include the costs and profits of the enterprise, and to the outside - the purchasing power, as well as the prices of competitors for similar products. The marketer must perform a number of actions when determining the price of the goods. It should be borne in mind that not every organization can set the price for a product independently. The thing is that any company that produces goods has a lot of competitors on the market. If an organization does not have a market power, it must accept the price of the product that the market sets. Not only does the financial power of an organization affect the definition of the price of goods. Of great importance are the features of the product itself. Also, the price is influenced by the company's own goals. The method of calculating the price can be any. When choosing the right one, it is necessary to take into account the stage of the product's life cycle, the degree of its novelty. The lowest possible price can be determined by taking into account the cost of production. But the maximum price depends on whether the product has some unique qualities. The average level of prices characterizes the cost of substitute goods, as well as the prices of goods of competing firms. When determining the level of a favorable price, it is necessary to take into account the pricing problems. The size of demand should also be taken into account. When it is large, the price can be raised. With a small demand, sales may increase the price decline. The marketer should evaluate the elasticity of demand for the price and only then make a decision. It is very important to estimate the costs of production. The marketing specialist needs to take into account permanent, gross and variable costs. The price for the goods is set by the marketing department at a level that not only covers all production costs, but also profits.

Analysis of the goods of firms-competitors

Before setting the price level to the marketerIt is necessary to make a study of the goods produced by competitors. You should take into account the existing prices on the market. Such analysis allows the company to determine the position of its goods in relation to the products-competitors. After the comparison, the marketer decides what price to choose - to set a lower or higher price. In addition, it is important to make a forecast of how competitors can react to the emergence of a new product in stores. Only after such a preliminary analysis can you choose the pricing method and start calculating the original price. Determining the level of prices, it is worth taking into account not only competitors and intermediaries, but also the state. After the price has been finally approved, it must be fixed in the documents.

Market relations have arisen for many millenniaback and we can safely say that they were and are an associate of human development and modernization of society and science. First of all, they are a way of cooperation and unique communication between people, organizations, countries and even political communities. In essence, a person's life is a market relationship, because almost all of his actions are aimed at improving the quality of life, increasing social status and enrichment.

When exactly the market relations were born

If we rely on historical facts, thenthe emergence of market relations occurred even under the primitive communal system. It was during this period of the development of human society that families and related clans appeared, rivalry arose between them, and a desire for enrichment arose. Not having any objects for a normal and comfortable existence, people turned to their neighbors, offering in exchange what they had in abundance themselves, that is, they offered an exchange, which is the basis of market relations. Familiar for the contemporaries of monetary and commodity market relations appeared during the development of the feudal system. But in most cases things were still a monetary unit - precious metals or stones, slaves or landed estates, that is, which served as a kind of evaluation measure in a particular society. Money, as such, began its path in market relations only in ancient China, two thousand years before the onset of our era.

Main functions of market relations

Without market relations, not onlythe development of human society, but also its existence in principle. The most important function of the market is the regulation of the demand and supply of various goods. This determines the pricing of everything that is bought and sold, both for luxury goods and for the most necessary, what a person needs every day and every minute. The stimulating function of market relations is that by increasing demand, the market increases and offers different goods. The manufacturer tries to reduce the cost of production, accelerate its production, that is, it looks for ways to optimize production. And this, in turn, serves as an impetus to the creation and development of new technologies and their introduction into the processes of manufacturing goods. The function of natural selection is to create healthy competition in the market for sales and production. Weaker economically economic units give way to stronger ones. And the very presence of many producers and sellers stimulates strong farms to grow and develop.