A Multiple Criterion Model for the Product Pricing Decision

There are a number of arguments that relate to how firms should do product pricing. Although classic economic arguments suggest that prices are set to maximize profit. empirical evidence indicates that cost-plus pricing is the most widespread approach used in practice. However. other researchers have found other views of how prices are set. including attaining a satisfactory profit and not making too much profit. This paper argues that product pricing requires a mUltiple goal model where finns vary the priorities that they place on the achievement of particular goals as part of setting prices. A goal programming model is developed that captures these multiple objec­ tives.