etting prices is a critical decision in implementing a retail strategy because price is a critical component in customers$$ perceived value. In setting prices, retailers consider the price sensitivity of customers in their target market, the cost of merchandise and services offered, competitive prices, and ethical restrictions.

Retailers need to consider legal and ethical issues when setting pricing. Some of the legal and ethical pricing issues are predatory pricing, resale price maintenance, horizontal price fixing, bait$-$and$-$switch tactics, scanned versus posted prices, and deceptive reference prices.