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Prices and Costs

In: How to Market Computers and Information Technology

Author

Listed:
  • Hamish E. Macarthur
  • Merlin Stone

Abstract

Price is a key determinant of marketing and business success. Cutting price without a corresponding fall in unit (costs for instance, via higher volume) reduces profit margin. Competitors may react, or even over-react; this is common in unstable situations. A price raised without a corresponding extra incentive to the customer can cause reduced sales, accumulated inventory and slower asset turn. Despite this, many companies under-research pricing, and fail to give pricing decisions enough priority. Sometimes, pricing is not the responsibility of marketing, and is handled by finance or accounting functions on cost based principles. At the other extreme, pricing can be too close to what the market wants, without any attempt to sell at a premium, irrespective of the cost of supplying the product. Pricing is part of the marketing mix and substitutable for and by other elements of that mix, such as how the product package is put together and promoted, and how the supplier’s image is projected.

Suggested Citation

  • Hamish E. Macarthur & Merlin Stone, 1994. "Prices and Costs," Palgrave Macmillan Books, in: How to Market Computers and Information Technology, edition 0, chapter 0, pages 96-108, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-13402-1_6
    DOI: 10.1007/978-1-349-13402-1_6
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