Pricing facts for kids
Pricing is the creation of a price. In a market economy the price is made by supply and demand. The suppliers would like to get the price as high as possible and the consumers would like to pay as few as possible. Prices will be built if consumers and salesmen make an agreement of the exchange of goods.
Contents
Type of market
Oligopoly
There are many consumers but only a few suppliers.
Monopoly
There are only one supplier and one consumer.
Polypoly
Many suppliers are compared to many consumers. By the low market share of the individual supplier you call it "atomize market structure". You also call this market form competitive market.
Very important factors for
Suppliers
- Cost of production
- Amount of the market price
- Speculation
- Production facilities
- Market position of the suppliers
- engineering progress
- national sanctions
- quantity demanded
Consumers
- Cost of production
- Necessity
- Available income
- Quality of the product
- Price of substitute (compensating) goods
- Price of complementary (additional) goods
- Quantity of supply
Law of supply
The supplier will offer more goods, if the market price is rising. (and backwards)
Law of demand
The consumer will demand more goods, if the market price drops. (and backwards)
Images for kids
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The purchase of a printer leads to a lifetime of purchases of replacement parts. In such cases, complementary pricing may be considered.
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A discount is any form of reduction in price
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"Everyday Low Prices" are widely used in supermarkets
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Xbox price bundle price
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Premium brands rarely discount due to the potential to tarnish the brand. Instead they offer gift packs to provide customers with value
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Extensive use of the terminal digit 'nine' suggests that psychological pricing is at play
