Pricing the Product

Pricing is a very complicated process of the market strategy because if one prices the product too low, there is the risk of consumers becoming less willing to buy the specific product.  Nonetheless, one must also price a product high enough to cover all expenses and produce a profit. 

Price is defined as the assignment of value, or the amount the consumer must exchange to receive the offering (money, goods, services, favors, votes, or anything else that has value to the other party). When considering a pricing strategy, one must consider demand.  Demand is the quantity of a product that customers are going to buy.  Demand is very important because when a product is inelastic, one is able to set a price at a higher rate because it is a necessity that consumers are willing to pay for. 

Marketers predict total demand by estimating the number of potential buyers for a product, then multiplying that number by the average units amount of each buyer's purchase. These numbers can be determined by continuously using market research.  An example of an inelastic product would be gasoline.  Gas is a product which consumers need and will pay for no matter if the price of gas goes up or down.