In this world, nothing comes free. For everything, there is a price. Pricing is an important element of the marketing mix and it plays a significant role in bringing about product-market integration. In common parlance, price is cost plus profit. However, in real life, it is not simple to determine the price of any product or service. Rather, pricing is one of the most complex decisions to make, and pricing decisions can make or mar the future of a product. It also has an important role to play in marketing. This article discusses some aspects of pricing decisions.

An important component of any marketing transaction is price. In simple words, price is the amount paid to the marketer by the buyer in exchange for the product received or services rendered. It is the cost of acquiring the product or receiving the services by the buyer. For the marketer, price is a gainful receipt, and includes a profit component as well; while for the buyer, it is a monetary sacrifice in lieu of the product/service received.

It is obvious that price should be legitimate and justifiable, so that the marketing transaction leads to a win-win situation for both the seller and the buyer. Price should be in accordance with the benefits perceived by the customer. Pricing is a specific process carried out with specific marketing objectives. Not only cost, but also other factors affect the price of a product or service. Each marketer has a distinct pricing policy in harmony with the marketing strategy. The barter system is almost entirely out of use these days. For everything, one has to pay in monetary terms. In the absence of money, no buying can take place. The money paid as price become a vital feature of marketing transactions. Price forms one side of the exchange process.

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