There are some rules for good pricing.
In another post, we exposed the price categories; in this one, we will comment on their pricing criteria.
Prices for the private sector in the domestic market
As long as the restrictions imposed by the consumer protection and antitrust legislation are respected, pricing for the private sector in the domestic market is at the offerer’s discretion.
That legislation deals with consumer rights and illegal practices such as price collusion, predatory pricing, fixed resale prices, misleading prices, price discrimination, and dumping.
Prices for government entities
In most countries, provided that the prices for government entities follow the respective rules, they are of the offerer free will.
In North America, the US Federal Acquisition Regulation defines the government types of contracting: fixed-price, cost-reimbursement, incentive contract, time-and-materials, labor-hour contract, indefinite-delivery contract, and letter contract).
Prices for export
Regarding export pricing, whenever it meets the requirements of the exporting country rules, like the US Export Administration Regulations, it is up to the seller to fix them.
Prices for domestic transfers
There are no official rules for pricing domestic transfers.
The main criteria used to price transfers are (a) based on market price, (b) based on operating cost, and (c) negotiated.
Prices for international transfers
International transfers move revenues, costs, and taxes worldwide, generating conflicts of interest between senders, recipients, and tax authorities.
According to the United Nations Department of Economic and Social Affairs (UN/DESA) and the Organization for Economic Cooperation and Development (OECD), the best way to solve the conflict between suppliers, buyers, and tax inspection bodies is to adopt the parties’ convenience policy, also known as the Arm’s Length Principle.
C. L. Eckhard, author of Pricing in Agribusiness: setting and managing prices for better sales margins.