Explain different factors that affect the fixation of the price of a product?  


Followings are the factors that we need to keep in mind while deciding about the pricing of the product:
1. Cost of production: The cost of production sets the basic minimum price that the firm would charge for the product. Herein, the cost includes fixed cost, variable cost as well as semi-variable cost. 
2. Degree of competition: If there is high competition in the market the firm need to keep the pricing low.Because if it charges high price firm may loose its customers.Whereas if there is less competition than a business can charge high price for its product.
3. Government regulations: Sometimes the government intervenes in the determination of price of a product with the objective of welfare of the society. 
4. Objectives of pricing: While determining the price of a product a firm must keep in mind its objectives of pricing.  Some of the objectives can be acquiring greater market share, surviving competition, quality leadership.
5. Methods of marketing used: The determination of price also depends on the methods of marketing that the firm uses. For example, if a firm incurs a huge cost on advertising it would charge a high price. 

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