Expansion of UK pharmacy chain into Irish market - factors to be considered when developing pricing policy

Cost of goods sold: The cost of goods sold is one of the main factors to be taken into account when establishing a selling price and developing pricing policy. Cost of goods sold is the invoice cost of the goods plus, any additional costs in bringing the goods to the point of sale such as, the cost of transporting the goods to the business and import duty. The cost of transporting stock to Ireland or the cost of acquiring Irish manufactured items needs to considered.

The affect of the change on the operating cost structure: If an organisation has high levels of fixed costs compared to variable costs, then the organisation has much scope in setting its selling price at a level that can stimulate demand. The cost structure of the Irish operation needs to be established.

The nature of the product or service: The product range provided in the UK needs to be evaluated for suitablity in the Irish market and pricing of similar Irish products needs to be established.

The competitiveness and structure of the industry: Should any industry be very competitive, then price reductions are the order of the day as companies compete for the market. Thus competitive pricing comes to the fore. The competitiveness of the Irish market needs to be established and considered.

Sensitivity to global issues: The pharmacutical industry can be affected by global developments in relation to the acceptability of using certain medicines and also the affect of drugs trials and adverse reactions to drugs etc.

Legal and environmental constraints: Government policy and legislation can affect the pricing options available to a business. There have been developments in Ireland in relation to the ability to open new pharmacies in recent times.