pricing objectives


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pricing objectives

the general and specific aims which a firm sets for itself in establishing the PRICE of its products. Pricing objectives are closely tied in with a firm's MARKETING OBJECTIVES which in turn are closely related to the achievement of the firm's overall BUSINESS OBJECTIVES.

Unit price x quantity sold is a key determinant of the firm's revenues which together with its underlying cost structures will determine the amount of PROFIT earned by the firm. Pricing objectives may be expressed generally in terms of achieving higher profit returns or related, for example, to some specified targeted RATE OF RETURN ON CAPITAL EMPLOYED. More specifically, in the case of particular products the pricing objective may be to increase MARKET SHARE in existing markets, or to enter a new market. In addition, a firm may seek to achieve price stability so as to avoid excessive fluctuations in its PROFIT MARGINS and the administrative costs associated with changing prices (for example, reprinting price lists). See PRICING, PRICING METHODS, PRICING POLICY, MARKET PENETRATION PRICING.