Question

Marketing Debate: Is the Right Price a Fair Price?

Prices are often set to satisfy demand or to reflect the premium that consumers are willing to pay for a product or service. Some critics shudder, however, at the thought of $2 bottles of water, $150 running shoes, and $500 concert tickets.

Take a position: Prices should reflect the value consumers are willing to pay versus prices should reflect only the cost of making a product or delivering a service.

Answer 1

When we consider this problem, we can say that there can be a split opinion about how goods should be priced. We can say that it is essential for a company to adhere to the needs of the stakeholders, while it is also necessary to be ethical in their processes and decision making. If we take the stakeholders approach, we can say that the main objective of any firm should be to maximize the interest of their stakeholders, which in turn means increasing the profit margin which the firm leverages by pricing the product according to a number of given factor. Ethically, however, we should price our products based on its actual price as well as how much a firm can bear, without affecting their profit margins, due to the fact that they have a responsibility to look after the needs of their customers.

This is why the concept of public and private services exist. The fact that some goods should not be in the hands of firms trying to maximize their profit has an understanding for the government either moderating the pricing for producing the good itself.

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