The price of an IPO is decided by the company and its merchant bankers, who are experts in handling the IPO process. There are two methods to set the price of an IPO: fixed price offering and book building offering. In a fixed price offering, the company and its merchant bankers set a specific price for the shares. In a book building offering, the company and its merchant bankers set a price range with a floor and cap price, and investors can bid for their desired price and number of shares.