Tag: utility, value and price

The price which a consumer pays for a commodity is always less than what he is willing to pay for it, so that the satisfaction which he gets from its purchase is more than the price paid for it and thus he derives a surplus satisfaction which Marshall calls Consumer’s Surplus (CS). 

Affection from friends and family has no commercial value.

Price is the quantity of payment or compensation given to the opponent in return for goods or services. In modern economies, prices are generally expressed in units of some form of currency as exchange values.

Implies a method in which an organization tries to win loyal customers by charging low prices for their high- quality products. The organization aims to become a low cost producer without sacrificing the quality. It can deliver high- quality products at low prices by improving its research and development process. Value pricing is also called value-optimized pricing.

• A value that will purchase a finite quantity, weight, or other measure of a good or service.
• As the consideration given in exchange for transfer of ownership, price forms the essential basis of commercial transactions. It may be fixed by a contract, left to be determined by an agreed upon formula at a future date, or discovered or negotiated during the course of dealings between the parties involved.

Refers to the simplest method of determining the price of a product. In cost-plus pricing method, a fixed percentage, also called mark-up percentage, of the total cost (as a profit) is added to the total cost to set the price. For example, XYZ organization bears the total cost of Rs. 100 per unit for producing a product. It adds Rs. 50 per unit to the price of product as’ profit. In such a case, the final price of a product of the organization would be Rs. 150.

Total cost refers to the total expense incurred in reaching a particular level of output; if such total cost is divided by the quantity produced, average or unit cost is obtained. A portion of the total cost known as fixed cost—e.g., the costs of a building lease or of...

Here are some of the various strategies that businesses implement when setting prices on their products and services.

• Pricing at a Premium. With premium pricing, businesses set costs higher than their competitors.
• Pricing for Market Penetration.
• Economy Pricing.
• Price Skimming.
• Psychology Pricing.
• Bundle Pricing.

Factors that must be considered while designing pricing strategies are :-

• Price of competitors.
• Strategies of competitors.
• Marketing strategy

Value and capital is written by John Richard Hicks in 1939. This book focuses on the microeconomic theory. It aims to establish market equilibrium of the goods demanded in the economy using ordinal utility approach.