question: How are prices for products set?
comment: Very roughly, supply and demand. Suppliers of products and services will charge the highest price that people will buy, while consumers will seek the lowest price that they can find. If someone can produce more units at a lower price (thereby making the same profit as a company that makes fewer, more expensive units), people will tend to buy the cheaper, more plentiful options. This happens at every step of the production process, from companies buying parts from other companies to labor unions negotiating the wages of workers. And then, at each stage, you have the government taking its cut. Prices are usually: Market price of parts and materials (which also follows this same formula) + market price of labor (which is influenced by the economy as a whole) + market price of manufacturing (usually energy costs, which depend on local power supply methods) + market price of transportation (affected by international politics) + taxes (affected by national an international politics) + profit margins of company set in response to the market (classic supply and demand).
passages: Section::::Products.
  
  Some of the products included in the CLAP boxes are rice, lentils, beans, tuna, cooking oil, pasta, corn flour, sugar and milk. Sometimes they can vary so much in types of products and/or quantity. The price established by the boxes is Bs.F 10,000 or Bs.S 100, and the delivery must be made every month.
  
  Section::::Products.:Imported products.
   Section::::The consumer's purchase decision process: an overview.
  
  The consumer buying process is usually depicted as consisting of 5 distinct stages:
   Section::::Basic explanation.:Regulating prices.
  
  The regulating price of a given type of product is a sort of modal average price level, above or below which people would be much less likely to trade the product. If the price is too high, buyers cannot afford to buy it, or try to get cheaper alternatives. If the price is too low, sellers cannot cover their costs and make a profit. So normally there is a limited range of prices within which the product can be traded, with upper and lower bounds. 
   Cost of goods available for sale
  
  Cost of goods available for sale is the maximum amount of goods, or inventory, that a company can possibly sell during this fiscal year. It has the formula:
  
  Beginning Inventory (at the start of this year)+ purchases (within this year)+ Production (within this year)= cost of goods available for sale
   Section::::Various Methods.:Haggling.
  
  Haggling, otherwise known as bargaining, is most present in businesses where items have no fixed price. Sellers will often price the item higher than they want to sell it, knowing that buyers are going to want to negotiate the price. Houses, cars, and services are the most common products sold using this model.
  
  Section::::Maintaining product integrity.
   Section::::Methods of setting prices.
  
  Section::::Methods of setting prices.:Demand-based pricing.
  
  "Demand-based pricing", also known as dynamic pricing, is a pricing method that uses consumer demand - based on perceived value - as the central element. These include price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing.
  
  Pricing factors are manufacturing cost, market place, competition, market condition, quality of product.
   Section::::Influences on purchase decision.:External influences on purchase decision.
  
  Purchasing behaviour can also be affected by external influences, such as culture, sub-culture, social class, reference groups, family and situational determinants.
  
  Section::::Influences on purchase decision.:External influences on purchase decision.:Culture.
   Section::::Influences on purchase decision.:Internal influences on purchase decision.:Prior experience.
   Materials and labor may be allocated based on past experience, or standard costs. Where materials or labor costs for a period fall short of or exceed the expected amount of standard costs, a "variance" is recorded. Such variances are then allocated among cost of goods sold and remaining inventory at the end of the period.
   Section::::The purchase decision and its context.
  
  Understanding purchasing and consumption behaviour is a key challenge for marketers. Consumer behaviour, in its broadest sense, is concerned with understanding both how purchase decisions are made and how products or services are consumed or experienced. Consumers are active decision-makers. They decide what to purchase, often based on their disposable income or budget. They may change their preferences related to their budget and a range of other factors.
   Section::::The consumer's purchase decision process: an overview.:Purchase decision.
   Notice that purchases and production might not be the same throughout the year, since purchase cost and production cost might vary during the year. But at the end, the total cost of purchases and production are added to beginning inventory cost to give cost of goods available for sale.
  
  Alternatively the costs of goods available for sales can be computed from the costs of sales:
  
  Costs of goods available for sale - Ending Inventory - Inventory write-downs = Costs of Sales
  
  Section::::References.
   Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost. Costs include all costs of purchase, costs of conversion and other costs that are incurred in bringing the inventories to their present location and condition. Costs of goods made by the businesses include material, labor, and allocated overhead. The costs of those goods which are not yet sold are deferred as costs of inventory until the inventory is sold or written down in value.
  
  Section::::Overview.
   Section::::Maintaining product integrity.:Products sold primarily based on price.
  
  There are a select group of products that should be sold based primarily upon their price and this includes all: consumables that have very little direct impact upon the consumer. Examples include items like: sand, gravel, and aggregate used in construction.
   Price encompasses the amount of money paid by the consumer in order to purchase the food product. When pricing the food products, the manufacturer must bear in mind that the retailer will add a particular percentage to the price on the wholesale product. This percentage amount differs globally. The percentage is used to pay for the cost of producing, packaging, shipping, storing and selling the food product. For example, the purchasing of a food product in a supermarket selling for $3.50 generates an income of $2.20 for the manufacturer.
  
  Section::::Marketing mix.:Promotion.
   Section::::Marketing aspects.:Pricing.:Dynamic pricing.
  
  Sellers change their prices frequently within the same day, especially for sensitive products such as fish.
  
  The price is usually high early in the morning (8-9h00) and is lowered as the time passes, especially if the product does not sell well that particular day. The new price is advertised on paper cards and orally. The lowest possible prices can be found after the midday (particularly by 13-14h00), often less than half the original starting price.
   List price
  
  The list price, also known as the manufacturer's suggested retail price (MSRP), or the recommended retail price (RRP), or the suggested retail price (SRP), of a product is the price at which the manufacturer recommends that the retailer sell the product. The intention was to help standardize prices among locations. While some stores always sell at, or below, the suggested retail price, others do so only when items are on sale or closeout/clearance.
   Section::::Influences on purchase decision.:External influences on purchase decision.:Subcultures.
   Section::::Cost of goods for resale.
  
  Cost of goods purchased for resale includes purchase price as well as all other costs of acquisitions, excluding any discounts.
   Section::::Influences on purchase decision.:Internal influences on purchase decision.:Perception.
   In their book, "The Strategy and Tactics of Pricing", Thomas Nagle and Reed Holden outline nine laws or factors that influence how a consumer perceives a given price and how price-sensitive s/he is likely to be with respect to different purchase decisions:
  
  BULLET::::- Reference price effect: Buyer's price sensitivity for a given product increases the higher the product's price relative to perceived alternatives. Perceived alternatives can vary by buyer segment, by occasion, and other factors.
   Section::::Confusion between prices and costs of production.
  
  Price is commonly confused with the notion of cost of production, as in "I paid a high cost for buying my new plasma television"; but technically these are different concepts. Price is what a buyer pays to acquire products from a seller. Cost of production concerns the seller's expenses (e.g., manufacturing expense) in producing the product being exchanged with a buyer. For marketing organizations seeking to make a profit, the hope is that price will exceed cost of production so that the organization can see financial gain from the transaction.
   BULLET::::- For every pair of consumer (C) and location (L), there is a fixed cost of serving C from L (e.g, depending on the distance between the power station and the consumer's house). This cost is denoted Cost[C,L].
  
  The game is a sequential game with three steps:
  
  BULLET::::1. Each producer selects a location for placing its facility.
  
  BULLET::::2. Each producer set a price for each user (price discrimination is allowed, since there is a different cost for serving different consumers).
  
  BULLET::::3. Each consumer selects a facility to connect to.
   BULLET::::5. willing to pay), and price floor (the least they are willing to accept), along with a listing duration, and an optional duration that delays the falling of the price (“Catch It Before It Falls” duration). If the merchant chose the fixed price method in step one they simply enter the fixed price that they would like to list the item for. Sellers may also upload up to seven product images, and choose extra exposure options that they would like to add to their listing.
   Slotting fee
  
  A slotting fee, slotting allowance, pay-to-stay, or fixed trade spending is a fee charged to produce companies or manufacturers by supermarket distributors (retailers) in order to have their product placed on their shelves. The fee varies greatly depending on the product, manufacturer, and market conditions. For a new product, the initial slotting fee may be approximately $25,000 per item in a regional cluster of stores, but may be as high as $250,000 in high-demand markets.
  