All organizations, whether for-profit or non-profit, set prices on their products or services. Price is all around us, called rent, tuition, fee, fare, rate, interest, toll, premium, honorarium, bribe, dues, assessment, retainer, salary, commission, wage and yes, even taxes.

For the most part, price determines buyer choice, although in today’s very competitive environment, non-price factors also have become important in buyer behavior. However, price still remains one of the most important elements determining your organization’s market share and profitability. Price is the only element in the marketing mix that produces revenue, while the other elements produce cost.

Many organizations do not handle pricing well, and pricing and price competition are problem areas. The most common symptoms are: pricing is too cost-oriented; price is not revised often enough to capitalize on market changes; price is set independent of the rest of the market mix rather than as part of a healthy integrated market-positioning strategy; and price is not varied enough for different product items, market segments and purchase occasions.

Pricing is handled in a variety of ways. Often with small organizations, top management sets price independent of marketing or a team. In mid-sized and large organizations, pricing typically is handled by a division and product line managers. Others who exert an influence in pricing include finance managers, actuaries, accountants, sales managers and production managers.

For healthy marketing pricing management to occur, your organization needs to consider the pricing objectives; demand; output cost variation; examination of competitors’ costs; choosing a pricing method and finally, price selection.

What factors does your organization consider?