Competitors' Costs, Prices, and Offers

One more external factor affecting the company's pricing decisions is competitors' costs as well as prices and probable challenger reactions to the company's own pricing moves. When setting prices, the company also must consider other factors in its external surroundings. financial condition may have a strong impact on the firm's pricing strategies. financial factors such as boom or else recession, inflation, and interest rates affect pricing decisions since they affect both the expenses of producing a product and customer perceptions of the product's price along with value. The company should also consider what impact its prices will have on other parties in its surroundings. How shall resellers react to various prices? The company must set prices that provide resellers a fair profit, encourage their support, and assist them to sell the product effectively. The government is a different significant external influence on pricing decisions. After all, social concerns can have to be taken into account. In setting prices, a company's small-term sales, market share, and profit goals can have to be tempered by broader societal considerations.