In practice, we find many prices for a product of a firm such as wholesale price, retail price, published price, quoted price, actual price and so on. The pricing policy of the firm may vary from firm to firm depending on its objective. This will have the way for routinised pricing. If a firm is selling its product in a highly competitive market, it will have little scope for price discretion. If the data on demand and cost are highly conjectural, the firm has to rely on some mechanical formula. (viii) Routinisation of Pricing:Ī firm may have to take many pricing decisions. Businessmen often tend to exaggerate the importance of price sensitivity and ignore many identifiable factors which tend to minimise it. The various factors which may generate insensitivity to price changes are variability in consumer behaviour, variation in the effectiveness of marketing effort, nature of the product. A pricing policy should never be established without consideration as to its impact on the other policies and practices. The various objectives may not always be compatible. On a more specific level, objectives relate to rate of growth, market share, maintenance of control and finally profit. The fundamental guides to pricing, therefore, are the firms overall goals. Pricing is not an end in itself but a means to an end. The entry of the government into the pricing process tends to inject politics into price fixation. Often the government prefers to control the prices of essential commodities with a view to prevent the exploitation of the consumers. The government may prevent the firms in forming combinations to set a high price. Prices should also be flexible to take care of cyclical variations. If a firm is selling its product in a highly competitive market, it will have little scope for pricing discretion. Pricing policies should be flexible enough to meet changes in economic conditions of various customer industries. Pricing should take care of the long run welfare of the company. In real life, firms want to prevent the entry of rivals. Generally, businessmen are reluctant to charge a high price for the product because this might result in bringing more producers into the industry. In any case, the sales should bring more profit to the firm. They should also stimulate profitable combination sales. The businessmen use the pricing device for the purpose of maximising profits.