Factors That Affect the Price of an Electronic Product

Factors That Affect the Price of an Electronic Product

Before selecting its prices, a company must consider many other considerations. These considerations include costs, demand, customers whose needs the offering is intended to meet, and the external environment (such as competition, the economy, and governmental regulations). Other components of the marketing mix (such as the offering’s nature, the stage in its electronic product life cycle, and its promotion and distribution) are among these factors.

Before determining prices, a company that intends to offer its electronic goods or services worldwide must conduct market research and study relevant market parameters. Likewise, organizations must comprehend the consumers, rivals, economic conditions, and political rules before successfully competing in other markets. We then examine each aspect and what it entails.

Factors That Affect the Price of an Electronic Product



The value consumers think an electronic product gives, the number of consumers, and how sensitive consumers are to price changes are three key aspects. Market size information is essential, but businesses must also know how price-sensitive their clients are. Given the price, will consumers purchase the electronic product? Or will they conclude they can live without the electronic good or service because they don’t think the price justifies the value? How much customers are willing to pay for the offering is also crucial. Research and judgment are required to predict how consumers will react to pricing changes.

Demand for electronic products is impacted by price elasticity or people’s sensitivity to price changes. For example, consider a set of elastic-waisted sweatpants. Stretching the waistband of a pair of dress slacks is far more challenging than trying the elastic band of sweatpants. Elasticity describes how much something can stretch or shift.

For instance, if someone pushes on the waistband of sweatpants, it may stretch. Similarly, if an electronic device’s price changes, its demand may fluctuate. For example, imagine that a 12-pack of Coke would now cost $1.50 each. At $1.50 per twelve-pack as opposed to $4.50 per twelve-pack, consumers are likely to purchase far more soda.

The demand for an electronic product is considered price elastic when consumers are very responsive to price changes, meaning they purchase more when prices are low and less when costs are high. Price elasticity is higher for durable products like TVs, stereos, and freezers than for essentials. When their prices decline, people are more likely to purchase them, and when they increase, they are less likely to do so. The demand is inelastic. On the other hand, when consumer demand for an electronic product is mainly constant, they are unaffected by price fluctuations. Price adjustments impact demand for numerous non-essential goods less than they do for basic food and electronic first-aid equipment.

The availability of replacements and competition for electronic items impacts the elasticity of demand. A person’s budget allocation influences the price for various electronic goods and services and whether they view an item as a need or a luxury. Since most smokers continue to buy cigarettes despite price rises and because many people don’t feel the need for them, some electronic products, like cigarettes, tend to be relatively price-inelastic. Since there are no alternatives, service providers like utility companies confront more inelastic demand in markets with a monopoly (just one supplier).



A company’s pricing decisions will significantly influence how competitors set prices and promote electronic goods. What would buyers do if they intended to purchase a specific pair of shoes but discovered that one retailer had them for 30% cheaper than the other? Companies frequently match the prices of their rivals because they want to gain and keep devoted clients. Customers can receive an additional discount from some merchants, including Home Depot, if they discover the same electrical product elsewhere for less money. Similarly, if one business offers free shipping, the customer can find that other companies do. Customers can check the pricing of several merchants before purchasing because there are so many electrical devices available for sale online.

The availability of comparable electronic alternatives also influences pricing decisions made by a corporation. For example, would a buyer purchase an identical pair of shoes if they could find them at a third retailer for 50% less? There is a decent probability that they will.


Government Laws and Regulations Regarding an Electronic Product

Businesses frequently reduce their prices when the economy is struggling and many unemployed individuals are unemployed. Currency exchange rates have an impact on pricing choices in global markets.

Federal and state restrictions have an impact on pricing decisions. Regulations safeguard customers, foster competition, and encourage moral and just business practices. Price variations may, however, occasionally be justified by cost disparities, market dynamics, and aggressive pricing by rival providers. In other words, engaging in practice is only sometimes against the law. For example, most people know restaurants give youngsters and senior citizens reduced meals. In addition, different people pay varying amounts depending on their ages and other parts depending on the time of day, with matinees costing less than nighttime performances. These price variations are legitimate.

Price fixing, which occurs when companies collaborate to set the same prices, is forbidden. Price fixing often means establishing inflated costs that customers must pay wherever they purchase a good or service. A few industries where price fixing has taken place include auction houses, airlines, and manufacturers of LCD (liquid crystal display) screens. When a company is accused of manipulating pricing, it usually needs to take action to make amends with the public.

Smaller firms are protected by unfair trade rules, which mandate that vendors maintain minimum pricing for comparable electronic goods. State regulations regulating dishonest commerce forbid big companies from offering electronic products at a loss to draw customers into their stores. A predatory pricing strategy is used by businesses when they establish low prices to drive competitors out of business.

Similarly to this, many states forbid bait-and-switch pricing. When a company tries to “bait” or attract clients with an extraordinarily low-priced electronic product, this practice is known as bait and switch, or bait advertising. Once clients have fallen for the trick, salespeople try to upsell them on more expensive technological goods. As a result, customers may occasionally be informed that the less costly electronic item is no longer available.

Customers might have observed bait-and-switch pricing strategies when purchasing electronic goods or minor home appliances. While bait-and-switch pricing is prohibited in many areas, retailers can use advertisements to persuade customers to buy a different electronic product by including warnings that there are no rain checks or only specific amounts available. Even if the advertised electronic product quickly sells out, the marketer must provide at least a small number of units.


Product Costs of an Electronic Product

A pricing decision must consider the costs of the electronic product or its inputs, including the sum spent on electronic product development, testing, and packaging requirements. Likewise, the expenses are connected with distribution and promotion. For instance, when a new product is introduced, its promotion expenses may be very costly since consumers must be aware of it. So, the price of an offering can vary. In addition, the price depends on where an electrical product’s life cycle is. Keep in mind that in other markets, an electrical product may be at a different stage of its life cycle.

The breakeven point is when total costs and revenues are equal (BEP). A business needs to generate more money than it spends to be profitable. The company loses money if total costs are higher than total revenue.



Before selecting its rates, a corporation must consider several elements and establish a pricing aim. These variables include the costs of the offering, the target market whose needs it is intended to serve, and the external environment (including the level of competition, the state of the economy, and governmental regulations). Other components of the marketing mix, like the offering’s nature, its stage in the life cycle of an electronic product, and its promotion and distribution, also affect the price of an electronic product. In addition, businesses must consider local environmental issues and client purchasing patterns in global markets. Finally, revenues must be more than total costs for a company to be profitable.

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