Price

I will set the price of my product at $3.98. To come up with this price, I will base this price on what value the customer gives the product. I will also take the customers' needs into account.

"In the narrowest sense, price is the amount of money charged for a product or service. More broadly, price is the sum of all the values that customers give up in order to gain the benefits of having or using a product or service. "
 Gary Armstrong and Philip Kotler. Marketing: An Introduction for Education Management Corporation, 10th Edition.

"Customer perceptions of the product’s value set the ceiling for prices. If customers perceive that the price is greater than the product’s value, they will not buy the product. Product costs set the floor for prices. If the company prices the product below its costs, company profits will suffer. In setting its price between these two extremes, the company must consider a number of other internal and external factors, including competitors’ strategies and prices, the company’s overall marketing strategy and mix, and the nature of the market and demand."
  Gary Armstrong and Philip Kotler. Marketing: An Introduction for Education Management Corporation, 10th Edition.

Objective 1 Identify the three major pricing strategies and discuss the importance of understanding customer-value perceptions, company costs, and competitor strategies when setting prices. (pp 275–280) A price is the sum of all the values that customers give up in order to gain the benefits of having or using a product or service. The three major pricing strategies include customer value-based pricing, cost-based pricing, and competition-based pricing. Good pricing begins with a complete understanding of the value that a product or service creates for customers and setting a price that captures that value. The price the company charges will fall somewhere between one that is too high to produce any demand and one that is too low to produce a profit. Customer perceptions of the product’s value set the ceiling for prices. If customers perceive that the price is greater than the product’s value, they will not buy the product. At the other extreme, company and product costs set the floor for prices. If the company prices the product below its costs, its profits will suffer. Between these two extremes, consumers will base their judgments of a product’s value on the prices that competitors charge for similar products. Thus, in setting prices, companies need to consider all three factors: customer perceived value, costs, and competitor’s pricing strategies.