Transportation

Many carriers pricing decision are based on the result of business environment. In transportation , the factors that may influence the pricing decision are market ,competitors and government . Firstly, the company can uses the method of value-of-service pricing in the market to set the prices. Evidently ,the transportation company will set the price at the level that will maximize the return. The company will not just depend on maximize the profit and set the price in the long run to prohibit the movement of freights or passengers. Therefore, the company is dependent on what the market perceives and expect to be a reasonable price or what the market forced to pay. The concept of price elasticity also important in the market’s impact on carriers prices.

 After that , the competitors will influence carrier pricing strategies .The carrier set the high prices to generate substantial profits, the competitors will be enticed to enter the market with lower prices, even at the risk of reduce company profits. This will be a symptom of the continual pressure on carrier to reduce transportation costs in their firms. The reduction of transportation costs will not be maximizing their profits. Sometimes , the across-board-price increase also usually matched by competitors to do compare. Therefore , the carriers must be responsible to the changes and directions of operating environment to ensure that the competitors will not compare the prices with company always.

At last , transportation was economically regulated by the federal government. The government of each country have their own policy, decisions, rules and regulations. Moreover, the Justice Department also entered the carrier pricing arena to monitor for antitrust violations. In some respects, the government agencies help mitigate the imperfections in the marketplace to control carrier pricing. The price of transportation will effects by the government directions and the government will determine the price of transportation by itself. So, the governmental controls affect how carriers price their services.