What are the major influence on pricing decision? Discuss with examples. Essay


Major influences on pricing decision

Major Influences on Pricing Decision

There are various decisions to consider when deciding the price to set on products. The prices are supposed to be determined by the need to realize a profit from the transaction, because in a business it is the utmost goal. Always factor in how much money one should need to make that goes beyond breaking even (Ta’eed, 2009).

One factors the cost of production like expenses in transport, labour involved, power used among others. If the rate does not sum up the entire costs, one will find it difficult to break-even. The best way to go about the costs is by billing the hours in a year and have they divided by all costs. Always factor in the hidden cost and account for the days off from your business, for example, the insurances, defaulted invoices and taxes (Ta’eed, 2009).

According to Ta’eed (2009), demand should be a unit of measure in pricing. In cases of higher demand, the prices should be higher and if it lowers one needs to lower the price to enhance competition. One should be able to read the signs when the demand is up, for example, when the work is too much, when the customers say how hard it is to get a service provider among others (Ta’eed, 2009). When the demand is low, there is the shortage of work and also the fact that freelancers are getting back to the system. The industry standards should guide you on what to charge. This can be achieved by knowing the extremes; how high and low your competitors are charging. This will help one to fit in the market (Ta’eed, 2009).

The skill level should also be a factor to determine pricing. One cannot charge the same as freelancers do, for example, a business person used to charge $25 an hour for a service as a freelancer. When he did quit freelancing, he charged the same service at $125 an hour because he is now endowed with skills (Ta’eed, 2009).

Experience is also a factor to consider for instance when choosing photographers the one with experience will outdo the others with talents but are starters. This is because one will save the client’s money and time.

One should also factor in who the clients are, for example, some clients’ need more time while others are jokers. For example, there are regular clients while others have what you desire most to do for them. These factors should guide you in varying your prices so as to get more work (Ta’eed, 2009).


Ta’eed, C. (2009). Nine Factors to Consider When Determining Your Price. Retrieved

20th June, 2010 from http://freelanceswitch.com/money/nine-factors-to-consider-when-determining-your-price/