Price is the amount of a customer pays for a good or service.
Consumers use price as a when comparing rival products. Do the tangible and augmented features of a product best satisfy a specific need for the least expenditure? Customers judge quality on price:
- items suggest high quality but may represent poor value for money compared to rival offerings
- goods can be perceived as of poor quality compared to rival offerings ie ‘too good to be true’.

Price is a key element of the marketing mix that:
- Influences customers’ perception of a product eg perceived value, positioning, image, and exclusivity
- Generates . Total sales revenue depends on price per unit. (TR) = price (P) x (Q) ie TR = P x Q.
- Affects profitability. Price determines revenue hence profitability
- Enables advantage when a firm is able to offer a better product than its rivals in terms of price, functionality, quality, after sales ie its overall value for money.
- Is flexible and can be changed quickest to influence sales eg to respond to a change in the offering of a rival

Many factors influence pricing decisions:
- Business Objectives: does a given price help meet a given objective. Low prices encourage sales by volume but – depending on price elasticity of demand - can reduce total revenue and profits
- Competitors’ pricing – are rivals offering a similar for a higher lower or similar price? How might rivals react to a price change – could a price war follow or might a rival be unable to match low prices?
- Customers’ to price: a reason for marketing research to establish levels of demand and elasticities.
- Market power: monopolies & market leaders are ; small firms & market followers are
- Legal constraints: firms cannot fix prices through cartels or by restricting the supply of products to retailers who sell below the official price list
- Economic conditions: consumers are more likely to accept high prices during a than a slump
- Costs: price must at least cover both fixed costs such as administration and variable costs such as components if the firm is to breakeven let alone make a profit
- Capacity & stock levels a business operating below and with unsold stock is more likely to lower prices
- : with these, a business may charge low prices to increase sales to enjoy lower unit costs as it increases the scale of its business