Price setting:Business study

There are four different approaches to setting a price. You may wish to consider a combination of these in accessing fee levels.

1. Based on Competitors price.
2. Taking all manufacturing cost plus profit margin.
3. Develop your price and see how market responds. Then adjust accordingly.
4. Value based fee- in relation to the value deliver(I would suggest this.)

I heard a wonderful story about how to decide what price to charge.

Two shrewed brothers ran a company which provides audiovisual equipments. Whenever a quotation was required for a customer, each brother go in separate office calculate the quotation and his justification for the price. Both brothers than meetup and compare prices and their justification. They would charge the higher price using the justification provided by the brother with the higher price.

Abridged

WHY DO SMART PEOPLE MAKE SUCH STUPID MISTAKES?