Pricing power,
Definition of Pricing power:
If a company does not have much pricing power, an increase in their prices would lessen the demand for their products. A company that has substantial pricing power is one that provides a rare or unique product with few rivals in the market. In this case, if the company raises its prices, the increase may not affect demand because there are no alternative products on the market that consumers can choose instead.
The ability to buy or sell at a low price; (now usually) the capacity to control or exert influence over the (retail) cost of items.
The extent to which a company may raise prices without reducing demand for its products. A company that offers a unique product or has few competitors typically has strong pricing power. It may raise prices without reducing demand.
Pricing power is an economic term that describes the effect of a change in a firm's product price on the quantity demanded of that product. Pricing power is linked to the price elasticity of demand. Price elasticity is a measure of the degree to which individuals, consumers, or producers change their demand or the amount supplied in response to price changes. For example, if the price of a good goes up, the tendency is that the demand for that good will go down as people will look for cheaper alternatives.
How to use Pricing power in a sentence?
- If there are plenty of competitor products, the company will have weak pricing power.
- Pricing power describes the effect of a change in a firm's product price on the quantity demanded of that product.
- If a company has a unique product, it will have strong pricing power because the customer has no alternative supplier for that product and must pay the price charged.
- A company's pricing power is linked to price elasticity of demand for its product.
Meaning of Pricing power & Pricing power Definition
