PRICING POLICY Meaning and
Definition
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Pricing policy refers to the set of guidelines or strategies established by a business or organization to determine the prices for its goods or services. It is a crucial aspect of a company's overall marketing and business strategy as it directly influences its revenue generation and profitability.
The pricing policy is formulated by taking into consideration various factors such as production costs, competition, market demand, and customer behavior. It involves deciding on the initial price, discounts, incentives, and other pricing mechanisms to attract and retain customers while ensuring profitability.
A pricing policy can take different forms depending on the business objectives. Some common pricing policies include cost-based pricing, where the price is derived from the production cost and desired profit margin; market-based pricing, where the price is determined by analyzing the competitive market and customer preferences; and value-based pricing, which focuses on the perceived value of the product or service to the customer.
Additionally, pricing policies may include promotional pricing, skimming pricing, penetration pricing, or dynamic pricing strategies to adapt to changing market conditions and maximize revenue. The objective of a pricing policy is to strike a balance between generating revenue, maintaining competitiveness, and satisfying customer demand.
Overall, pricing policy is a fundamental component of a company's marketing and business operations that helps establish the right price for its offerings and ensures profitability while considering market forces, costs, and customer perceptions.
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Etymology of PRICING POLICY
The word "pricing" comes from the verb "price", which derives from the Old French word "prisier" meaning "to set a price". It ultimately traces back to the Latin word "pretium", meaning "price" or "value".
The term "policy" originated from the Middle English word "policie" or "policye", which came from the Old French word "police" and the Latin word "politia", both meaning "government" or "administration". Over time, "policy" came to refer to a course of action or a set of rules and regulations.
Therefore, the term "pricing policy" combines these two elements, referring to a set of rules or strategies for establishing prices. It describes the overall approach or guidelines a business or organization follows when determining the prices of its products or services.
Similar spelling word for PRICING POLICY
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