Which of the following is the first step in setting a pricing policy?


Question:  Which of the following is the first step in setting a pricing policy?

A   Selecting a pricing method

B   Selecting the pricing objective

C   Determining demand

D   Estimating cost

Answer:     Selecting the pricing objective


Steps in setting a pricing policy Description
Establish pricing objectives Define specific goals that align with the overall business strategy, considering market, competition and cost structure.
Market and competitive analysis Analyze the market, including customer segments and preferences and assess competitors’ pricing strategies.
Cost analysis Calculate the costs associated with product development, production, marketing and distribution.
Pricing method selection Choose a pricing method or strategy, such as cost-plus pricing, value-based pricing, skimming, or penetration pricing.
 Price setting Set the initial price based on the chosen method, considering the desired profit margins and perceived customer value.
Pricing implementation Implement the chosen pricing strategy, ensuring it is communicated effectively to customers and stakeholders.
Monitor and adjust Continuously monitor the market, competition and internal factors and be prepared to adjust pricing as needed to achieve objectives.
Compliance and ethical considerations Ensure pricing practices comply with legal regulations and ethical standards, avoiding anti-competitive or deceptive practices.