Factors that impact pricing decisions include internal factors like the marketing objectives for the organization, and external factors such as the nature of the market, competition and demand. Marketing will determine a strategy for the product, which greatly impacts the proposed pricing for a product.
Prior to setting pricing, companies will also evaluate the cost of producing the product. Pricing will be strategically set in order for the organization to be profitable, while still ensuring that they are able to compete in the marketplace.
Environmental factors, such as the current state of the economy and government regulations, are also key components of establishing a pricing strategy for goods or services.