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When a business is setting the price of a product or service, it needs to consider the following:

• competition – Should a business follow the lead of its competitors when it comes to pricing or adopt its own pricing strategy?
• quality – Does the product reflect its price?
• image – In what ways will the price of a product affect a customer’s perception of it?
• production cost – How will the cost of making the product be reflected in the price?
• profit per unit – How much money should a business try to make compared to the cost of each individual product?

Price is always linked to value. Customers will look at a product and think “Is it worth that?”

How businesses will use price as a way to attract customers has resulted in several pricing strategies.