How firms set prices ??

The Biggest question after making a product is what should be the price of the product??. It should be less than the competitor so that people will get attracted or It should be greater than the competitor so that people will think this is a better product. There are infinity question around how firms set product prices??

Below details are just a small incite to the pricing details...

 Relative Price:

The difference between nominal price and relative or real price (as exchange ratio) is often made. Nominal price is the price quoted in money while relative or real price is the exchange ratio between real goods regardless of money. The distinction is made to make sense of inflation. When all prices are quoted in terms of money units, and the prices in money units change more or less proportionately, the ratio of exchange may not change much. In the extreme case, if all prices quoted in money change in the same proportion, the relative price remains the same