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What is a Commodity?

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A commodity is a type of product or service that sells at a market price determined by supply and demand. Customers see little difference in quality between commodity items and almost always choose based on price alone. As such, producers are forced to sell at the market price.
In many cases, a product or service is said to be partially commoditized meaning that customers may see minor differences between competing products but are primarily motivated by price. In such markets, it is difficult but not impossible for a producer to achieve a price that's higher than the market price.
Overview: Commodity
A product or service that is sold at a market price determined by supply and demand. Individual buyers and sellers of a commodity typically have little or no influence over the price.
Techniques to establish product differentiation such as marketing and quality improvements typically have little effect when a product is commoditized or partially-commoditized. As such, commodity businesses typically focus on reducing costs and increasing output as the primary factors they can control.
Related Concepts


This is the complete list of articles we have written about pricing.
Algorithmic Pricing
Bargaining Power
Benchmark Price
Price Fixing
Cost-plus Pricing
Price Gouging
Customary Pricing
Decoy Effect
Everyday Low Price
Marginal Utility
Willingness To Pay
Dynamic Pricing
High-Low Pricing
Market Value
Flat Pricing
Loss Leader
Predatory Pricing
Price Discrimination
Snob Effect
Market Price
Price Competition
Price Leadership
Premium Pricing
Price Economics
Price War
Revenue Management
Veblen Goods
Price Floor
Price Promotion
Price Sensitivity
Price Skimming
Price Umbrella
Pricing Power
Pricing Strategy
Sticky Prices
Value For Money
More ...
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Pricing Strategy

An overview of common pricing strategies.

Price Discrimination

A list of price discrimination strategies.

Price War

An overview of price wars.

Price Economics

A list of price economics principles and theories.

Premium Pricing

A definition of premium pricing with examples.

Penetration Pricing

A definition of penetration pricing with examples.

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Channel Pricing

A definition of channel pricing with examples.

Supply And Demand

An overview of supply and demand with examples.

Value Pricing

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