price

Market value, or agreed exchange value, that will purchase a definite 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 (such as sale of goods 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. In commerce, it boils down to what (1) a buyer is willing to pay, (2) a seller is willing to accept, and (3) the competition is allowing to be charged. With product, promotion, and place of marketing mix, it is one of the business variables over which a firm can exercise some degree of control. It is a criminal offense to manipulate prices (see price fixing) in collusion with other suppliers, and to give a misleading indication of price such as charging for items that are reasonably expected to be included in the advertised, list, or quoted price. Called also sale price and selling price.

One useful but fairly uncommon type of contract stipulation is a most-favored-customer clause. Under such an arrangement, no one gets a better price than this customer, or if someone else does then this customer's price drops to that level. This affects future negotiations (it makes things tougher on that customer's competition, and it gives the vendor an excuse not to negotiate with them, if that's what the vendor wants, since its hands are tied.) But it's then easier for that vendors rivals to target its customers, and harder for it to do the reverse. Sometimes this raises the price the vendor can charge, because each customer doesn't negotiate as much, assuming future customers will.

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