
Supply and demandMarket forces that are responsible for pricing in a competitive market. | Price elasticityHow much supply and demand change when price changes. |
Market powerThe ability of a buyer or seller to influence prices. | Market structureThe number and size of buyers and sellers in a market. |
MonopolyA single seller that dominates a market such that they can control prices. | Perfect competitionA market of many small buyers and sellers that individually have no influence over prices. |
Price sensitivityHow much a buyer cares about price for a particular good or service. | Price discriminationSellers that find ways to charge price sensitive customers less and price insensitive customers more e.g. coupons. |
Predatory pricingPricing below cost to hurt the competition. | DumpingSelling goods cheaply in a foreign market. |
CartelsWhen sellers agree to set prices at some level. An anti-competitive practice. | Product differentiationProducts that are unique in the minds of customers such that they may command a unique price. |
CommoditiesGoods that are viewed as indistinguishable by consumers such that they will buy on price alone. | Price warsPrice battles between sellers. |
Bidding warsPurchasing battles between buyers. | Product bundlingDiscounts for packages of services or products. |
Dynamic pricingPrices that are set in real-time based on behavior, competition or demand. | Peak pricingHigher prices during peak demand. Also known as surge pricing. |
Loss leader pricingA cheap price designed to attract customers. | Penetration pricingA cheap price designed to build market share. |
Skimming pricingA high initial price designed to target customers who want to be first to try a new thing. | Psychological pricingPricing based on customer perceptions. |
Cost-plus pricingSellers that base their prices on their costs plus some markup. | Price leadershipA firm that competes by consistently offering the lowest prices, often based on lower costs and greater scale. |
AuctionsA market based on competition between buyers for a product with limited supply. | Market clearing priceThe price at which all supply will be sold. |
Substitution effectThe ability of buyers to substitute other goods when prices change. | Law of diminishing marginal utilityConsumers will only buy so much, even if the price goes very low. |
Price gougingIncreasing prices excessively in a time of crisis or shortage. | Price umbrellaA price set by a dominant competitor that influences the prices of all sellers. |
Bargaining powerThe power of buyers and sellers to negotiate prices. | Customary priceA long established price. Consumers may resist change to a customary price. |
Sticky priceA price that consumers strongly prefer such that demand drops if you change it. | Snob effectLuxury consumers that abandon a previously high priced brand when it is discounted too often. |
Benchmark priceA recent price that buyers and sellers may reference. | Too cheap to meterA resource that is so inexpensive that it can be offered on a flat rate basis for somewhat unlimited consumption. |
InflationBroad and sustained price increases across an economy. | DeflationBroad and sustained price decreases across an economy. |
Superior goodA good that is demanded more as income rises. | Inferior goodA good that is demanded less as income rises. |