Pricing objectives

Pricing objectives (or goals) is a term used in marketing and economics to provide direction to the whole pricing process.^[1][2] This involves determining overall objectives that include the following: 1) the overall financial, marketing, and strategic objectives of the company; 2) the objectives of the product or brand; 3) consumer price elasticity and price points (the prevailing market condition); and 4) the resources available to the company.

List price cap established by the Argentine government of Edelmiro Farrell in 1945.

Common pricing objectives

Some of the more common pricing objectives are:

• maximize long-run profit
• maximize short-run profit
• increase sales volume (quantity)
• increase monetary sales
• increase market share
• obtain a target rate of return on investment (ROI)
• obtain a target rate of return on sales
• stabilize market or stabilize market price: an objective to stabilize price means that the marketing manager attempts to keep prices stable in the marketplace and to compete on non-price considerations. Stabilization of margin is basically a cost-plus approach in which the manager attempts to maintain the same margin regardless of changes in cost.
• company growth
• maintain price leadership
• desensitize customers to price
• discourage new entrants into the industry
• match competitors prices
• encourage the exit of marginal firms from the industry
• survival
• avoid government investigation or intervention
• obtain or maintain the loyalty and enthusiasm of distributors and other sales personnel
• enhance the image of the firm, brand, or product
• be perceived as “fair” by customers and potential customers
• create interest and excitement about a product
• discourage competitors from cutting prices
• use price to make the product “visible"
• help prepare for the sale of the business (harvesting)
• social, ethical, or ideological objectives