The three major considerations in price setting are: costs set the floor price; ________; and customers' assessment of unique features establishes the price ceiling.
A) competitors' prices and the price of substitutes provide an orientation point
B) competitors' prices establishes a "target price" goal
C) the price of substitutes establishes a "target price"
D) the price of competitors and substitutes does not enter into the pricing considerations.
E) none of the above

Question

Quizplus · Accepted Answer

Competitors' prices and the price of substitutes provide an orientation point for where the price should be set in relation to the market. This helps the company understand how much flexibility they have in pricing their product without pricing themselves out of the market.

The Three Major Considerations in Price Setting Are: Costs Set