Science Fair Project Encyclopedia
- For people whose family name is Price see Price (disambiguation).
In economics and business, the price is the assigned numerical monetary value of a good, service or asset. The concept of price is central to microeconomics where it is one of the most important variables in resource allocation theory (also called price theory). Price is also central to marketing where it is one of the four variables in the marketing mix that business people use to develop a marketing plan.
Historically, price value has superseded the barter value of pre-monetary systems, in which bartering was used to determine a value of a good or service. Economists, strictly speaking, view price as an exchange ratio between goods. Thus it exists also in a barter system. From this point of view, price is akin to opportunity cost, that is, what must be given up in exchange for the good or service that is being purchased.
The price of an item is also called the price point, especially where it refers to stores that set a limited number of price points. For example, Dollar General is a general store or "five and dime" store that sets price points only at even amounts, such as exactly one, two, three, five, or ten dollars (among others). Other stores (such as dollar stores, pound stores, euro stores, 100-yen stores, and so forth) only have a single price point (1$, 1£, 1€, 100¥), though in some cases this may get more than one of some very small items.
In Britain, Australia and many other countries (usually those of the British Commonwealth), RRP is an acronym for recommended retail price. The North American equivalent is MSRP, for manufacturer's suggested retail price. Both are often shortened to just retail price or sometimes list price, and indicate the nominal price a manufacturer or distributor thinks a product should be sold for.
Much of the time, stores charge less than this price, however this depends upon the actual wholesale cost of each item, usually purchased in bulk from the manufacturer, or in smaller quantities through a distributor.
Manipulation of retail price is common in the U.S., where companies often inflate these numbers, then give greater supposed "discounts" to create false "value". This is especially common at retail chains which act as their own distributors and outsource manufacturing, thereby allowing them to set their own retail prices.
- price point
- unit of account
- marketing mix
- production, costs, and pricing
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