PRICE DETERMINATION

If you go to supermarket, what the most important thing you will consider?

let me guess, price right? Yes!! The price will influence our buying power. Same goes in logistics purchasing issue. 

But before we go to far, let me explain about this first. A goods that going to sell has its own price range. We call it price floor and price ceiling. That product price cannot be lower than price floor and cannot excess price ceiling.

Now lets move on the topic that we are gonna to stress more. Price determination, we need to understand the relationship between cost and price.

The price determine suppose to be cover the all cost of production, maintenance, and distribution. However, all the issue that involve in purchasing must be a high quality one. Only the product with best quality will be chosen.

Our main point we will discuss as listed below:

1. competition business environment
2. political stability
3. foreign exchange

Competition business environment. The price consumption by company also will refer to others competitors which offer the best price for their product. This can lead the company that involve had to provides to us(purchaser) low price to make sure their product come priorities and well known.

For example, company Proton would like to choose one brand of tire out of four suppliers. So what Proton will consider is which supplier can provide them the lowest price in order to produce low cost car to their customer.

Political stability. Political issue is the most risky issue in price determination. Price will be effect most without we knowing and realize about it. For example in Mesir, their politic is not stable when their is an issue with the government. So it hard to make production because there will be a lot of procedures need to be fill up for every single activity that will involves.

Foreign exchange. Some production might purchase some material from foreign country. Sometimes it may be low price and sometimes it may be high cost. Its depend on each country currency. If you purchase from United States, it will incurred high cost due to their currency is higher than Malaysia. But if you purchase in Indonesia, it an advantages for us due to our currency is higher than them.

Ladies and gentlemen, lovely readers and visitors,

In conclusion, all the main point that we discuss earlier is not just about the cost involve, thus it consider all the others factor to get the best product to produce the best product to the customer which is quality, transportation, maintenance, and direct labor.

that all from us for this time, THANK YOU!