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4 Examples of Commoditization

 , updated on March 26, 2017
Commoditization is the tendency for certain types of products and services to become a commodity over time. This means that customers begin to purchase the lowest price item every time as they view products in a category as more or less the same. The following are common examples.


A new and innovative technology may command a high price as long as customers remain interested in new features and improvements. If customers lose interest, the product becomes a commodity that people purchase on price alone. For example, between 1975 and 1985 videocassette recorders were reasonably expensive with prices approaching $1000. There was a significant price difference between models with customers paying significant premiums for advanced features. By the 1990s, prices had fallen dramatically to the $50 to $100 range with marginal differences between top brands and generic equivalents.


Agricultural products are typically viewed as a commodity. However, it is possible for farmers to command premium prices by marketing food of superior quality. For example, grapes for wine making aren't considered a commodity as some terroirs command a significant price premium.


Service industries such as airlines can be intensely price competitive as customers tend to choose the cheapest flight.


Fashion faces commoditization pressures as fast fashion firms identify fashion trends and get them to market quickly at a low price. In many cases, fashion brands are able to command high prices based on brand legacy and brand image that give the brand social status that some customers value.
Overview: Commoditization
The tendency for products and services to become a commodity over time.
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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The definition of commodity with examples.


The common types of pricing.

Willingness To Pay

A list of factors that influence willingness to pay.

Pricing Strategy

An overview of common pricing strategies.

Price Umbrella

The price set by a dominant competitor in a market.

High-Low Pricing

An overview of a common price strategy.

Pricing Examples

An overview of common pricing strategies.

Price Discrimination

A list of price discrimination strategies.

Price Economics

A list of price economics principles and theories.

Yield Management

Pricing of airline seats, hotel rooms and other expensive assets with fixed capacity.

Price War

An overview of price wars.

Premium Pricing

A definition of premium pricing with examples.

Penetration Pricing

A definition of penetration pricing with examples.

Variable Pricing

The definition of variable pricing with examples.

Channel Pricing

A definition of channel pricing with examples.

Supply And Demand

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Value Pricing

The definition of value pricing with examples.
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