The final price for a product might be influenced by numerous factors, which can be categorized into two main groups, internal factors and external factors,

 Internal factors

When setting price, marketers need to take into consideration several factors, which are the result of company choices and actions. Largely, these factors are controlled by the company and, if needed, can be altered by them  However, while the business may have control over these factors, making a quick change is not always realistic. For example, product pricing may depend on the productivity of a manufacturing facility. The marketer knows that increasing output can reduce the cost of manufacturing each product and thus allow the marketer to potentially reduce the product’s price. However, increasing output may require major changes at the manufacturing facility that will take time and will not translate into lower price products for a substantial period

Marketing decisions are directed by the overall objectives of the company. It is important to appreciate that all marketing decisions, including price, work to help achieve company objectives

• Return on Investment (ROI)-A firm may set as a marketing objective, the prerequisite that all products achieve

• Cash flow-Firms might seek to set prices at a level that will insure that sales income will cover product production and marketing costs. This is most likely to happen with new products where the organizational objectives permit a new product to simply meet its expenditures while efforts are made to establish the product in the market

• Market share-The pricing decision might be important when the firm has a goal of gaining a hold in a new market or retaining a certain percentage of an existing market.