Weighing customers, competitors, and costs and Conclusion Discuss the critical issues relating to price setting from a management accounting perspective, in contemporary organizations Introduction: The purpose of this paper is discussing the critical issues, which may relate to the pricing system from a management accounting perspective, in contemporary organizations. The moment the firm choose to start selling product in near future, pricing system can be considered as one of the most difficult decision.
Customers usually have their own system for pricing judgement depended on type of products. Therefore, in case of the price is too high, customers actually choose to go with the competitors, and against, in case of the price is too low, customer may mislead about the quality of the product as well as the firm may not be able to make profit over the cost of making the products. There are many issues can put the impacts on pricing system.
Discussion:Major issues that affect pricing decisions There are three main issues that are considered can make big impact on price settings: Customers Customers’ effect on the demand for a firm’s product or service can affect the pricing systems. The demand is affected by several factors such as the features of a product and its quality (Horngren, 2015). Therefore, selling product, firm needs to research over the product by the eyes of customers to see how much does it how many people are willing to buy the product. However, instead of lower the price, the firm can beat their competitors by providing better experiences on product with the price is not too high from the lowest competitors (Kelly, 2014). Competitors Depending on what types of business the firm is working on whether it is monopoly, oligopolies or perfect competitive, firm need to understand their competitors in order to be competitive and earning profit.
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