Write a short note on preparing the product pricing plan.

There are in principle only two main pricing policies they are price skimming policy and price penetration policy. The factors that should be considered before implementing either policy are given below.

The factors that favour a price skimming policy are:
1. Demand is likely to be price inelastic;
2. There are likely to be different price market segments, thereby appealing to those buyers first who have a higher rage of acceptable prices.
3. Little is known about the cost and marketing the product
 

The variables that favour a price penetration policy are:
1. Demand is likely to be price elastic;
2. Competitors are likely to enter the market quickly;
3. There no distinct price-market segments;
4. There is possibility if large savings in production and marketing costs if large sales volumes can be generated.