When setting a pricing strategy, the firm may have several objectives in mind. A firm must formulate price objectives clearly before developing an overall pricing objective. Achieving a target profit. Achieving greater market share. Another objective may be to avoid government investigation and control.
Producers often use COST as a primary basis for setting price.
Using cost-based pricing, U.S. firms set prices too high. The recent economic collapse in Asia is leading to huge price discounts from Asian firms. Service industries are adopting many of the same pricing tactics as goods-producing firms. Those services that aren't important to customers are cut. With both goods and services, the idea is to give the consumer value.