How do firms come up with a price for their product?  Well according to the textbook, they look at several things when determining a price for their product thats not too high, yet high enough to turn a profit.  Establishing a price for a product can be broken down into stages, in which each stage is carefully examined.  First of which is to determine the pricing objectives.  Does the firm want to set prices that allow for survival, profit, return on investment, market share, cash flow, status quo, or product quality?  If a firm selects the survival objective, they are simply trying to set a price to increase sales volume to balance out the expenses.  When shooting for a profit objective, a firm is finding a price level and minimum cost levels that lead to maximum profits.  Return of investment objectives have a firm using trial and error since not all cost and revenue information is currently available to set a good price.  Another objective, the cash flow, is used when a firm wants to set prices that allow for quick sales, or suggest rapid sales of the product.  Status quo objectives occur when a firm is targeting a price level that stailizes the demand with the sales, so that everything is balanced.  The final pricing objective is the product quality which is based off of setting prices to balance the reseach and development and give the product a very high quality apperance.  The next stage in determining a price range is to look at target market's evaluation of price.  Depending on what the target market is, can determine whether the consumer is willing to pay the price for the product.  The third stage is to evaluate the competitor's prices (if any).  The firm should look at what the competition is charging for their goods, and decide what price best fits their product and how the compare in quality with the competition.  The fourth stage is to determin a selection of a basis for pricing, which in short how should the firm add to the price over the cost of producing the product.  A firm can use cost-plus pricing, by adding a percentage to the price after the cost to produce the product is determined.  They can go with a markup pricing, which is adding a predetermined percentage to the price of the product. Demand-based pricing, which is determining a price based on demand for the product, and then there is a competition-based pricing.  The competition-based pricing is when a firm decides to price a product based on the competition's price. Then in the fifth stage the firm selcts a pricing strategy, which is selecting a course of action to achieve the pricing and marketing objectives set by the firm.  Once all of these steps have been carefully thought out and considered, the final stage is reached, which is the selection of the price.  There is a lot of reseach and work that has to be put into determining a price, and mainly the firm has to know where they want to go with the product and have an idea of where they want to be in the future of their business.