There is often a tendency for marketers to focus more on activities like promotion, product development, and market research. Pricing is of vital importance because of the following reasons: 

·         it is important to plan for pricing changes and their impact on the brand and product perception, this can still be accomplished much faster than any other changes. 

·         Any pricing decisions for a product need to be made through proper research. In some product categories, a consumer will form a perception about its quality and relevance as soon as they see the price. 

·         Sales promotions are often a short time price based offering such as a percentage reduction or a two in one type offer. 

Once the segments and positioning is somewhat in place, the marketing mix planning comes into effect. Here the product, distribution, and promotional elements are decisions to focus upon and to finalize.

Another market analysis needs to be conducted at this point. In this one, there needs to be specific information gathered about how the price affects the quantity of the product demanded.

A company can now get an accurate assessment of the total fixed and variable costs associated with the product. These are a necessary input for pricing decisions as the final price needs to at least cover these costs.

Another vital element that feeds into pricing is the environment. This means an understanding of the competitor’s strategies, their product and its value as well as an understanding of any industry or legal constraints.

As detailed above, there are several objectives that a company can have from its pricing strategy. This is the point in the process that those objectives need to be discussed and agreed upon.

Pricing objectives are subdivided into various factors, like; Profit Maximization, Revenue Maximization, Maximize Quantity, Maximize Profit Margin, Quality Leader, Partial Cost Recovery, Survival, Status Quo. 

Keeping in mind revenue and costs, a company may want to maximize profits 

Revenue Maximization: With less focus on profits, a company may focus on increasing revenues in order to increase market share and lower costs in the long term. 

Maximize Quantity: A company may want to sell a specific number of items to decrease long term costs. 

Maximize Profit Margin: Another objective may be to increase the profit margin for each unit and not focus on the total number of units sold. 

Quality Leader: A company may want to use price to signal high quality and establish itself as the quality leader. 

Partial Cost Recovery: If an organization has multiple revenue streams, it may not be too focused on recovering a hundred percent of its costs. 

Survival: Sometimes, the best a company may want to do is to cover costs and to remain in the market. If the market is in decline or there are too many competitors, survival may take temporary priority over profit. 

Status Quo: There may be a need to avoid price wars with competitors. So a company may maintain a stable price to continue a stable profit level. 

Pricing is important because if you give a product a random price it will be to high. You have to do some research to competitors. You need to cut the price with a small amount to get a lot of consumers. A price is always a first impression for a customer. If you have a good price consumers will come back.