Which of the following are external factors in pricing decisions?

A wide range of factors may be taken into account by suppliers when setting or negotiating prices.

Which of the following are external factors in pricing decisions? Select TWO that apply.
A . Competition in the market
B . Cost of production
C . Where the product is in its lifecycle
D . Customer perception of value
E . Costs of sales

View Answer

Answer: A, D

Explanation:

External factors in pricing decisions include Competition in the market (A) and Customer perception of value (D).

These factors are outside the supplier’s direct control but influence pricing strategies to remain competitive and meet customer expectations:

Competition in the market (A): Market competition dictates how much a supplier can charge without losing business to competitors.

Customer perception of value (D): How customers perceive the product’s worth affects its acceptable price range.

These factors are considered external as they relate to market dynamics rather than internal cost structures, according to CIPS’s guidance on pricing influences.