The term price denotes money value of a product. It represents the amount of money for which a product/service can be exchanged.

A seller prices a combination of physical product plus several other services and benefits along with the product including:

Warranty promise.

Repair facilities.

Package.

Free home delivery service.

Credit facilities.

Some sellers quote a price that include various services while others price these individual services separately.

PRICING POLICIES

Pricing policies provide guidelines within which pricing strategy is formulated and implemented. For example:

Pricing should aim at maximizing profit for the entire product line.

Or prices should be set to promote the long-term welfare of enterprise. For example to discourage the competition in the market.

Or prices should be adopted and individualized to fit the diverse competitive situations encountered by different products.

Or a pre-determined and systematic method of pricing at which new product should be provided.

PRICING METHOD

The retail price of a formulation should be calculated in accordance with the following formula.

R.P=(M.C+C.C+P.M+P.C) X [1+MAPE/100]+E.D

WHERE

R.P=Retail Price

M.C=Materials Cost and includes cost of drugs, other pharmaceutical aid including averages and process loss thereon.

C.C=Conversion Cost including machine hours labors etc.

P.M=Cost of packaging Material.

MAPE=Maximum allowable post manufacturing expenses.

E.D=Excise Duty.