What is IPO pricing?

IPO pricing is the process of determining the offering price or price for an IPO.

A company must consider several factors to determine the right price for the IPO. IPO pricing is a crucial step in the IPO process because a rightly priced IPO will perform well. The company undertakes IPO pricing in consultation with professional merchant bankers.

The IPO price is determined by one of the two IPO methods: Book building or Fixed price.
In the book-building method, the price of the shares is determined based on the demand for the shares at the end of the bidding process. The issuer announces a price range (e.g. Rs 75 to Rs 80) for the issue.

In the fixed price method, the offer price is set before the IPO opens for the subscription (e.g. Rs 75).

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