Pricing Theory

Pricing theory explores how businesses determine the value of their products or services. It considers factors like production costs, customer willingness to pay, competition, and market demand. The goal is to set a price that maximizes profit yet remains attractive to consumers. Different strategies, such as cost-plus pricing (adding a markup), value-based pricing (based on perceived value), or competitive pricing (matching rivals), are used depending on the market context. Overall, it’s about balancing various influences to find the optimal price that promotes sales and profitability.