What are the fundamental factors on which price depends?

<p>Trends are generally created by four major factors: government, international transactions, speculation/expectation and supply and demand. These areas are all linked as expected future conditions shape current decisions and those current decisions shape current trends. Government effects trends mainly through monetary and fiscal policy. These policies effect international transactions which in turn effect economic strength. Speculation and expectation drive prices based on what future prices might be. Finally, changes in supply and demand create trends as market participants fight for the best price.</p>

<p id="isPasted">Price is fundamentally determined by the interplay of Costs (production, labor, overhead), Demand (customer willingness to pay and perceived value), Competition (competitor pricing and market share), and Market Conditions (economic trends, regulations, product life cycle). Companies also set prices based on internal Pricing Objectives (profit maximization, sales growth) and other elements of the Marketing Mix (product features, promotion, distribution). &nbsp;</p><p><strong>Some internal Factors</strong></p><ul><li>Costs: The cost of raw materials, labor, and overhead expenses sets the floor for pricing; selling below cost leads to losses.&nbsp;</li><li>Pricing Objectives: A company's goal (e.g., profit maximization, market share growth) influences whether prices are set higher or lower.&nbsp;</li><li>Product Value &amp; Perceived Value: The utility, brand reputation, features, and customer perception of value affect how much a buyer is willing to pay.&nbsp;</li><li>Marketing Mix: Other marketing elements like packaging, advertising, distribution, and customer support service affect pricing decisions.&nbsp;</li></ul><p><strong>​Few external Factors</strong></p><ul><li>Demand: The number of buyers and their sensitivity to price changes (price elasticity of demand) heavily influence pricing.&nbsp;</li><li>Competition: The extent of competition, competitor pricing, and the relative market strength of competitors dictate pricing flexibility.&nbsp;</li><li>Market Conditions &amp; Economy: Broader economic conditions, such as unemployment and workers' wages, affect how much consumers can and will spend.&nbsp;</li><li>Government &amp; Legal Regulations: Government policies, taxes, and regulations can set price ceilings or floors, impacting pricing.&nbsp;</li><li>Product Life Cycle: The stage of a product's life cycle (introduction, growth, maturity, decline) also influences pricing strategies. </li></ul><p><br></p>