PLEASE BE SURE TO REPLY TO EACH CLASSMATE. ALSO, PLEASE MAKE THE REPLY PERSONABLE.310 DF:New Post by Lana DyeIn businesses,companies, or organizations, product prices are determined through supply anddemand. Essentially, consumers will pay a specific price for a productdepending on its’ demand level. If this product is in high demand and everyoneis wanting it, the price is going to increase. Because of the price increase,people will begin to buy less of this product. Moreover, you will see customersbuying more of a product if the price goes down. This is known as thedemand-based method (Warren et al., 2017). Then, there is the competition-basedmethod. This price is determined by other competitors. If a business owner’scompetition has reduced their prices, they must adjust their prices as well inorder to face the competition (Warren et al., 2017).Prices are mainly determined by your supply chain. If a supplier increasestheir prices, the business owner will have to increase their prices as well inorder to continue operating. For example, I have seen this first hand with myfather’s business. He owns two restaurants and because of the price inflationin food products, he has had to increase his prices.Determining selling prices can also be seen through methods such asproduct cost, total cost, and variable cost (Warren et al., 2017). Each methodis different in that they apply to various decision and productionenvironments. Therefore, it depends on what type of business you are in inwhich you will determine what cost-method will be used.ReferenceWarren, C. S., Reeve, J. M., & Duchac, J. (2017). ManagerialAccounting (14th Edition). Cengage Learning US. https://bookshelf.vitalsource.com/books/9781337516143263 wordsReply310 DF:New Post by Jacob OutlawThere are different ways tocreate the price of a product. The main strategies are cost-plus pricing, priceskimming, and competitive pricing. Cost-plus pricing is adding all the variableand fixed costs together and making up a percent more to create profit. Thisstrategy is good for companies who have similar products and this allows thecompany to understand the average profit they will make. Price skimming iswhere a new product is introduced into the market and companies price it highand let it slowly go down. This strategy allows a market value to beestablished and lets the customers choose what the product is worth. (Shavandi &Zare, 2013) Competitive pricing is where the competition for a similar productcreates the prices. This allows the company to understand what the customersare willing to pay and takes the guesswork away. These strategies are commonlyused among companies and are effective ways to create product prices.Resource:Shavandi, H., & Zare, A. G. (2013). Analyzing theprice skimming strategy for new product pricing. ScientiaIranica.Transaction E, Industrial Engineering, 20(6), 2099-2108. https://www.proquest.com/scholarly-journals/analyzing-price-skimming-strategy-new-product/docview/1509437149/se-2?accountid=11033
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