Question

Ashwin was a fashion designer. On losing his job, he decided to sell the designer clothes online under the brand name ogue. The garments were made of good quality fabric with intricate designs and skilled craftsmanship, making them expensive to produce. Realizing that the online market is very competitive, he decided to charge a reasonable price for the garments. The price would cover the cost of production and sale of garments as well as give him 10 percent margin over and above the cost.
Identify and explain two factors affecting the price determination discussed in the above case.

Hint:

Pricing strategies must balance internal costs with external market dynamics to ensure competitiveness and profitability.

Answer 1

Ashwin factored in both internal and external determinants while pricing. The internal factor, cost of production, included premium fabric and skilled labor. Externally, he had to keep in mind the competitive landscape of the online market, which pushed him toward setting a balanced and profitable price.