Final answer:
Companies set prices based on known input costs, desired ROI, and market conditions.
Step-by-step explanation:
In business, companies set prices using known input costs, desired return on investment (ROI), and an understanding of the current marketplace.
For example, if a company knows that the cost of production for a product is $10 and they want to achieve a 20% ROI, they would factor in these known costs and desired profit to determine the price they will set for the product.
By analyzing input costs, desired ROI, and market conditions, companies can make informed decisions about pricing strategies.