WILLINGNESS AND PRICING FOR PRODUCT

All combinations of goods that lie on inside the budget line is known as budget set.Both the consumer and the producer set their budget for product.So basically pricing is the key of the budget. In company's point of view it is defined as the process of determining the value that is received by an organisation in exchange of its goods or services.Pricing acts as the main key strength of generating revenue for any organisation.Mainly pricing decision of an organisation have a direct impact on his profit and success.
                               Price of a product is influenced by number of factors,such as raw material or we can say manufacturing cost,depending upon the competition in the market and at last quality of a product.
               Before setting the price for product, an Organisation needs to ensure that price most cover all the producing product cost with some profit.As the profit directly impact on the financial resources of the organisation.Pricing strategy of an organisation should be realistic,flexible and profitable. So that organisation uses multiple number of methods and strategies to determine the price.For company's point of view pricing should be focused on achieving the financial goal or fulfilling the target of an organisation. Because it contributes directly to the success or failure of the organisation.
                     There are mainly three types of pricing objectives:1.Profit oriented  
                                      2.Sales oriented
                                      3.Status oriented
      1. Profit oriented pricing strategy involves setting price for product that will help the organisation to make money on each sale.It is the addition of the cost for manufacturing process and some relevant percentage for profit.
       2. Sales oriented pricing for any organisation depends on promotion and the former sales efforts to drive revenue.
      3. Status oriented involves maintaining existing price or basic price on what other organisation are charging.
                          When it comes to the revenue,then the customer and company's mutual choice for the pricing decision is of 2 types:
                                       1.Consumer Surplus
                                        2.Producer Surplus
          1. Consumer surplus is the price that consumer is willing to pay and consumer actually pay.
         2. Producer surplus is the price that the producer is willing to pay and at last the price actually sold.