| UNIT 6: PRICING PRICING OR PRICE? READ THE PASSAGE AND DO THE EXCERCISES Pricing Is the manual or automatic process of applying prices to purchase and sales orders. Depends on: Production costs Distribution costs Demand level Competitors’ current or potential prices Pricing Also depends on company’s consideration of: Their overall objectives Their consequent profit or sales targets (: maximum revenue, maximum market share) Market positioning (Prestige pricing: quality products cannot be sold if their price is thought to be too low) Up or Down A large inventory, a fall in market share often lead to a cut in prices. Cost inflation, urgent need of cash often lead to a rise in prices. Demand that exceeds its possibility to supply also likely leads to a rise in prices. Elastic or Inelastic When sales respond directly to price variations, demand is said to be elastic. If sales remain stable after a change in price, demand is inelastic. .