Listen to a Business English Dialogue About Justified price
Walter: Ruby, have you heard of the term “justified price”?
Ruby: No, what does it mean?
Walter: Justified price refers to the fair or reasonable value of a product or service based on its intrinsic qualities, market demand, and other relevant factors.
Ruby: How do businesses determine the justified price of their products?
Walter: Businesses typically conduct market research, analyze competitor pricing, and consider factors like production costs, quality, brand reputation, and customer preferences to arrive at a justified price.
Ruby: Is justified price the same as the selling price?
Walter: Not necessarily. The selling price may be higher or lower than the justified price depending on factors like supply and demand dynamics, marketing strategies, and negotiations with customers.
Ruby: Can you give an example of how justified price is used in business?
Walter: Sure, for example, a company manufacturing smartphones might consider factors like the cost of materials, technology features, brand value, and competitor pricing to determine the justified price for their product.
Ruby: How important is it for businesses to set a justified price?
Walter: Setting a justified price is crucial for businesses to remain competitive, attract customers, and generate profits while ensuring that they’re providing value to customers based on the quality and features of their products or services.
Ruby: Are there any risks associated with setting the wrong justified price?
Walter: Yes, setting a price too high may deter customers and lead to lost sales, while setting it too low may erode profit margins and undermine the perceived value of the product.
Ruby: Thanks for explaining, Walter. Justified price seems like a key consideration for businesses to balance profitability and customer satisfaction.