Pricing of commodities is a very complex thing. One has to put in place a number of things before coming up with the fairest value in the market. The face value tend to change from time to time due to change in factors of production. Iaso tea price is greatly affected by the change of parameters.
Many companies have different production cost when producing their goods. This is the key think business men base on when deciding how to retail their products. Production cost include the cost of raw materials used in the entire process of production. The personnel employed in the industry also counts a lot.
Demand for goods defer from one season to another. Merchants have a way of maximizing sells in different seasons of the year. When the demand of a product is high the company tend to drive down the production cost thus the profit margin will be high. When the demand is low the company will lower the value of goods so has to encourage more clients to try out their products.
Transport cost is also very important in this process. This mainly apply to the merchants who produce goods in one point of the globe and sell in the other. Transport cost can sometime be very high depending on the cost of oil which really counts a lot when it comes to transport. When less transport cost is incurred that means the cost of commodity will be friendly to the clients.
The way the other competitors have priced their commodities is also key to every company. When other tea companies have over priced their tea the other party will take advantage of that by doing so but slightly lower than the others. This is a strategy of attracting more people to try out their products.
Tax has also been something many traders consider for a very long time. Different governments have different tax systems thus making some products more expensive in some parts of this world than the rest. The business men pass the tax imposed in their commodities to their final consumers by adding the cost of goods therefor when there are low tax rates the products will have a friendlier face value.
The purchasing power of consumers is also something to consider. Clients with high purchasing power tend to be willing to spend more than those with low purchasing power. Traders take advantage of this by hiking products meant for such people so has to increase the profit margin in every transaction. This increase the income of company in an amazing way.
Economics of scale also apply to many firms. Big firms enjoy economics of scale thus their products tend to be cheaper than those of small companies. This is because the small company incur a lot when producing one unit of product.
Many companies have different production cost when producing their goods. This is the key think business men base on when deciding how to retail their products. Production cost include the cost of raw materials used in the entire process of production. The personnel employed in the industry also counts a lot.
Demand for goods defer from one season to another. Merchants have a way of maximizing sells in different seasons of the year. When the demand of a product is high the company tend to drive down the production cost thus the profit margin will be high. When the demand is low the company will lower the value of goods so has to encourage more clients to try out their products.
Transport cost is also very important in this process. This mainly apply to the merchants who produce goods in one point of the globe and sell in the other. Transport cost can sometime be very high depending on the cost of oil which really counts a lot when it comes to transport. When less transport cost is incurred that means the cost of commodity will be friendly to the clients.
The way the other competitors have priced their commodities is also key to every company. When other tea companies have over priced their tea the other party will take advantage of that by doing so but slightly lower than the others. This is a strategy of attracting more people to try out their products.
Tax has also been something many traders consider for a very long time. Different governments have different tax systems thus making some products more expensive in some parts of this world than the rest. The business men pass the tax imposed in their commodities to their final consumers by adding the cost of goods therefor when there are low tax rates the products will have a friendlier face value.
The purchasing power of consumers is also something to consider. Clients with high purchasing power tend to be willing to spend more than those with low purchasing power. Traders take advantage of this by hiking products meant for such people so has to increase the profit margin in every transaction. This increase the income of company in an amazing way.
Economics of scale also apply to many firms. Big firms enjoy economics of scale thus their products tend to be cheaper than those of small companies. This is because the small company incur a lot when producing one unit of product.
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