Pricing Products Meaning and use of price The amount of money a seller is willing to accept in exchange for a product at a given time and under certain circumstances Price allocates goods and services among those who are willing and able to buy them Price allocates financial resources (sales revenue) among producers according to how well they satisfy customers’ needs Price helps customers allocate their own financial resources among various want-satisfying products Copyright © Cengage Learning. All rights reserved

Pricing Products (cont’d) Supply and demand affects prices Supply The quantity of a product that producers are willing to sell at each of various prices Quantity supplied by producers increases as the price increases Demand The quantity of a product that buyers are willing to purchase at each of various prices Quantity demanded increases as the price decreases Equilibrium Where the supply and demand curves intersect and quantity and price for buyers and sellers are equal Copyright © Cengage Learning. All rights reserved

Supply and Demand Curves Copyright © Cengage Learning. All rights reserved

Pricing Products (cont’d) Price and nonprice competition Price competition An emphasis on setting a price equal to or lower than competitors’ prices to gain sales or market share Nonprice competition Competition based on factors other than price Buyers’ perceptions of price Buyers will accept different ranges of prices for different products A premium price may be appropriate if a product is considered superior or has inspired strong brand loyalty Copyright © Cengage Learning. All rights reserved