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3 Examples of a Benchmark Price

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A benchmark price is an actual price that is paid on a liquid market that can be used as a reference for buyers and sellers. The following are common examples.

Commodity Markets

The term benchmark price is primarily associated with commodity markets. Major commodities such as gold, corn and oil trade on international exchanges. The prices on these markets are open to the public and are widely used as a reference in negotiating prices. Prices will vary from the benchmark price based on quality and location. For example, a farmer near a large market may negotiate a higher price for crops if they can sell directly to local shops because this reduces transportation costs and customers may prefer local produce. If the farmer gets a premium on the benchmark price, the price may still rise and fall with the benchmark.

Product Markets

It is common to use the price of a major competitor as a benchmark. For example, a small bookseller may reference the prices of an ecommerce company when setting prices.

Market Intelligence

In cases where pricing does not occur in a public market, market intelligence firms may collect recent price data to build a benchmark for an industry. This is then sold to both buyers and sellers who use it as a reference for strategy and negotiation. For example, benchmarks for real estate transactions, consulting services or construction projects.
Overview: Benchmark Price
The price of recent transactions on a market that can be used as a reference by buyers and sellers.
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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