Why and how do service providers justify their pricing?

Answer 1

Geographical survey on pricing of the same/similar service/product.

Many service providers use large budget advertising and free promotions to bring in more customers. While it builds a customer base, the costs trickle down to the actual customer. Other increase in costs can vary from cost of equipment due to overseas costs of production all the way to simple cost of employees. Ultimately, many factors come into play when pricing a service with so many arms and legs to provide it.

To justify the pricing, the provider must convey the actual value and hard work that goes into bringing such a service or convey the greatness of the service compared to others due to the hard collective work of the whole company. Basically to justify pricing value must be effectively communicated in advertising.