A firm may choose its pricing objectives from any of the following: 1) To maximize the profits: the primary objective of the pricing decision is to maximize profits for the concern and therefore pricing policy should be determined in such a way so that the company can earn the maximum profits. 2) Price stability : as far as possible the prices should not fluctuate too often. A stable price policy above can win the confidence of the consumers. It will also add to the goodwill of the firm. For this purpose the concern should consider long run and short run elements. 3) Competitive situation: one of the objective of the price decision is to face the competitive situation in the market. Price of the commodities should be fixed keeping in the mind the competitive situation. Sometime the management likes to fix a relatively low price for its product to discourage potential competitors. 4) Achieving a target return: this is a common objective of well establishe...
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