Traditional accounting pricing tools are not fit for the 21st century Essay

Traditional accounting pricing tools are not fit for the 21st century - Essay Example This paper illustrates that since the production of the goods had started the price has been a great matter of concern for both the sellers and buyers. The producers and sellers have been coming up with different pricing techniques and strategies that they found perfect in the scenario they are working. With the change in time and modernization of the society, it has become evident for the sellers to adopt new and better pricing strategies to compete well in market and keep up with the expected prices of consumers as the consumers are always having a wider choice of companies to buy the product that they want in most of the cases. Basically the accounting functions may help in price determination in this modern market place because the accounting functions allow record keeping of all business transactions making it possible to easily estimate the costs and then calculating the prices to be charged accordingly. Several pricing tools have been introduced for sellers and producers in or der to the prices for their products effectively. Accurate pricing is very important for each company in order to attain the long term profitability for the company. It is necessary that the objective of the pricing strategies adopted by a company should be a sign of the complete marketing plan of the company. A pricing strategy adopted by the company should be chosen in a way that it helps in maximizing the profits for the company by stabilizing the sales and attracting the potential customers in market. (Gitman 2003, 57). To determine the price of a product, it is greatly necessary for the company to take in account all the expenses made in the production of the good and that add up to the cost of production. The proper and complete consideration of the all the variable and fixed costs would allow the producer to decide over the right pricing strategy to be adopted also taking in consideration the market trends (Glueck 1980, 153). The producers then utilize the pricing tools in or der to determine the right price for their product. The key feature of any business is to determine efficient pricing strategy, which plays a vital role in order to make the customer perception about the business or product. There was an era when manufactures used to determine the price of the items and retailers simply had to follow it, differentiation would be dependent upon shopping experience, convenience, product range, ambience and quality of service of the retailers (Mankiw 2009, 69). The current market of today globally experiences several fluctuations due to which traditional financial models that used to develop keeping in mind specific variables which were not specifically viable. Hence in order to cope up with the modern requirements of the market and in order to cope up with the fluctuations and randomness of the market new concepts needs to emerge. It is often observed from the past that the changing requirements have forced experts to come up with the amendment in the existing models for financial calculation so that the environmental variables that are more significant would be included in the calculations and the variables that are not relevant or are not highly significant would be eliminated from the model. In order to study the effectiveness of the traditional accounting methods and the need of modern accounting method, it is important to analyze the environmental variables of the current market so that the current pricing strategy is appropriate (Ross, Westerfield, and Jordan 2009, 183). The traditional pricing methods are more focused on customers that are time oriented or money oriented where for some customer’s convenience is the most important factor and for others, price is the most important factor. Apart from these two customers there are some proportion of quality conscious customers as well who seek quality at any cost. The correct pricing strategy actually depends upon the nature of the product as