This is very true that the name of the company(image of the company) and the product cost play a very important role in determining the prices of the products. Suppose, a local company manufactures a high quality cotton shirt, then it will charge the local market price as compare to a branded company like Nike which manufactures the same product (because Nike charges premium prices because of strong brand positioning). Similarly, product costs also determines the price of a product. Companies adopt different pricing strategies to determine the price of the product for example, penetrating pricing strategy, premium marketing strategy or skipping pricing strategy. Although there are different methods which are used in all of these pricing strategies but one thing which is common in all of them is the coverage of the product cost. All of the companies when set the prices of their products cover their product costs first. In other words, product costs give a floor to determine the prices of the products. Therefore, products costs and the image of the company play an important role in price setting.
