Dealing with transfer prices has intrinsically a significant component of uncertainty. This uncertainty arises mainly from the fact that business, and consequently market prices and the profitability of the companies, are impacted by several factors.
Although companies can target certain profitability on an intercompany transaction, and thus, settle the transfer prices accordingly, the final result of a transaction for any company will depend on both external and internal factors. Among the external factors, we can mention the macroeconomic conditions, business cycles, situation of the particular industry, technological changes, etc.; while the internal conditions would include the own business strategy, single product or portfolio lifecycle, market share, commercial objectives and financial policy, etc.