competition market would mean that there would be 
no room for each seller to earn abnormal amounts of 
profit, and instead it entitles each company to get a 
normal or equal profit only. Whether they like it or 
not,  companies  have  to  set  their  price  equal  to 
market  price.  If  it  is  more  than  market  price,  the 
consumers would not buy from them and find other 
sellers instead. Meanwhile, if it is less than market 
price,  the  company  would  receive  many  demands 
and  would  not  be able  to  meet this  expectation  as 
their stocks would  be limited. The other  feature of 
perfect competition market is that there would be no 
product  differentiation,  as all  sellers  would  supply 
the generic, or perfect substitutions of, goods. 
According to Kotler and Armstrong (2004), price 
is  one  important  element  of  marketing  mix.  In 
determining  price,  firms  should  consider  other 
marketing mix elements, due to any  decision made 
pertaining to those elements would affect the price 
too. Thus, firms have to think comprehensively with 
regards  to  the  marketing  mix  strategy,  especially 
when  considering  the  price.  In  the  product 
development stage, instead of analysing the product 
features  first,  firms  can  set  the  ideal  selling  price 
first  for  particular  customers,  then  develop  the 
product  to  suit  that  price. This technique  is  called 
‘target costing’ (Kotler and Armstrong, 2004). 
3.2.1  Pricing in Islamic Marketing 
Islam is a complete and comprehensive way of life. 
It  covers  all  aspects  of  human  activities  including 
society,  politics,  economy,  education,  spirituality 
etc. and does not tolerate any attempts to secularise 
human activities (Abdullah and Ahmad, 2010). 
Moreover, Islam puts more emphasis on the life 
in the hereafter. In other words, any human activities 
in this current life would determine a person’s status 
in the hereafter, and whether they would end up in 
paradise or hell. Given the totality of Islam, it can be 
applied in all areas including, but not limited to, the 
social sciences, physics, biology, law, and, notably, 
marketing (Saeed et al., 2001). Moreover, Saeed et 
al. also propose using Islamic marketing ethics as an 
alternative to  secular  approaches,  for  three reasons 
which  include:  (1)  the  absoluteness  of  Islamic 
teachings,  (2)  the  transcendental  aspect  of 
absoluteness and non-malleable nature, and (3) the 
emphasis  on  value-maximisation  instead  of  profit-
maximisation. 
With regard to the value-maximisation, Saeed et 
al., (2001) explain that it is based on the concept of 
justice.  In  the holyur’an,  Allah  orders the  believers 
to do justice. 
O  ye  who  believe!  Stand  out  firmly  for 
justice,  as  witnesses  to  Allah,  even  as 
against yourselves, or your ... lusts (of your 
hearts),  lest  ye  swerve,  and  if  ye  distort 
(justice)  or  decline  to  do  justice,  verily 
Allah is well-acquainted with all that ye do. 
(Annisa, 4:29) 
Based  on  the  above  verse,  Muslims  should 
practice justice under any condition, even if it may 
be against their own self, family or group interests. 
Moreover, Muslims should avoid bias when judging 
or dealing with others. Finally,  in the business and 
marketing  context,  justice  relates to  “fair  play”  and 
“just dealing” (Saeed et al., 2001). 
The application of justice can be found in many 
business  examples.  In  trade,  sellers  must  inform 
customers of the features of the products, including 
the  defects  if  any  to  ensure  that  the  price  paid  is 
equal  to  the  quality  and  value  perceived  by 
customers. In the service sector, restaurants have to 
be transparent by informing customers the prices of 
foods  and  beverages.  In  Surah  Annisa  verse  49, 
Allah  orders  the  believers  to  practice  justice,  fair 
play, and just dealings: 
O  you  who  believe!  Eat  not  up  your 
property  among  yourselves  unjustly 
except  it  be  a  trade  amongst  you,  by 
mutual  consent.  And  do  not  kill 
yourselves (nor kill one another). Surely, 
Allah is Most Merciful to you. 
To assure that just dealings and fair play exist in 
a  trade contract,  the  features  of  the goods  (subject 
matter)  must  be  precisely  defined  by  both 
contracting  parties  (seller  and  buyer).  Prophet 
Muhammad  SAW  encourages  the  parties  to  a 
contract  to mention all aspects of the agreement to 
avoid  misunderstanding  which  can  lead  to  legal 
dispute as mentioned in the hadith narrated by Ibn 
Abbas below: 
“Allah’s  Apostle    came    to  Medina  and 
the  people  used to pay  in advance  the 
price of fruits to be delivered within one 
or  two  years.  (The  sub-narrator  is  in 
doubt whether it was one to two years or 
two  to  three  years.)  The  Prophet  said, 
"Whoever  pays  money  in  advance  for 
dates (to be delivered later) should pay it 
for known  specified weight  and  measure 
(of the dates).”  (Book #35, Hadith #441, 
Sahih Bukhari) 
Islam  does  not  view  pricing  solely  from  the 
business  perspective  but  also  from  the  interest  of 
society. According to Abdullah and Ahmad (2010), 
all parties’ (buyers, sellers, society, etc.) interests are