Organizational Considerations

Management has to decide who within the organization might set prices. Companies handle pricing in a variety of ways. In small companies, prices are frequently set by top management instead than by sales or marketing departments. In big companies, pricing is normally handled by divisional or product line managers. In industrial markets, salespeople can be allowed to negotiate with customers within sure price ranges. Even so, top management sets the pricing policies and objectives, and it frequently approves the prices proposed by lower-level management or salespeople. In industries in which costing is a key factor (railroads, aerospace, oil companies), companies frequently have a pricing department to set the best prices or help others in setting them. This department reports to the top management or marketing department. Others who have an effect on pricing include sales managers, finance managers, production managers and accountants.