Running Head: UNDERSTANDING THE PROCESS FOR MAKING PRICING DECISIONS
As an MBA student, we have tackled the marketing mix especially the four Ps model on
our several classes. Here I will discuss the importance of the other P which is “pricing”. Price is
the money the customer needs to pay in exchange of goods or services. For example, an iPhone
costs a certain amount of money or a mechanic charges a certain fee when they repair your car.
While price is the easiest marketing variable that can be changed or copied, it can make or break
a company. Therefore, critical thinking must be applied when making pricing decisions. Setting
the right price is actually one of the most important decisions the management and marketers has
to make. They have to consider several factors such as the cost of making the product or
providing the service as well as the customer’s perceived value. Of the four P’s in marketing
mix, pricing is the only one that affects the revenue.
