Other External Factors

When setting prices, the company must also consider other factors in its external environment. Economic conditions can have a strong impact on the firm's pricing strategics.17 Economic factors such as boom or recession, inflation and interest rate affect pricing decisions because they affect both the costs of producing a product and consumer perception of the product's price and value. The company must also consider what impact its prices will have on other parties in its environment. How will resellers react to various prices? The company should set prices that give resellers a fair profit, encourage their support and help them to sell the product effectively. The government is another important external influence on pricing decisions. Finally, nodal concerns may have to be taken into account. In setting prices, a company's short-term sales, market share and profit goals may have to be tempered by broader societal considerations.

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