The Marketing Mix: Price

Price is the second element of the marketing mix. Getting the price right is crucial — charge too much and customers go to competitors; charge too little and the business may not cover its costs. This lesson covers the main pricing strategies used by businesses and the factors that influence pricing decisions.

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Why Is Pricing Important?

Price directly affects:

• Revenue — price x quantity sold = total revenue.
• Demand — generally, higher prices reduce demand (the law of demand).
• Profit — if the price is too low, the business may not cover its costs.
• Brand image — a high price can signal quality; a low price can signal value.
• Competitiveness — the price must be competitive relative to rival products.

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Pricing Strategies