Pricing
Pricing refers to the decision-making process that goes into establishing a value for a product or service. A business can use many different strategies when setting prices, but they are all a form of pricing. The price that's set during the pricing process is what the customer will pay for that product or service [The Balance].
An indicator of the value that a product or service can command in a “marketplace. Pricing is the crucial dimension of the “marketing mix. Prices usually depend upon three significant variables: cost, competition, and customer. There are various strategies for pricing, depending on the company's overall market strategy and cost base. There are various types of pricing: for example, cost-based pricing (in which companies apply an addition or markup to their cost base) and value-based pricing (which is based upon an estimation of what the market or consumer will be prepared to pay relative to the perceived value delivered). Prices can be merchandized into packages; they can be bundled into unique offerings; they can be broken down into individual elements.
A free market economy differs significantly from pricing in a controlled economy. Pricing is directly affected by the presence of monopolies. When a company completely controls the price and supply, it can be deemed a “monopoly. " An example of this could be the diamond industry. When a few large-scale producers control pricing, that can be deemed an “oligopoly. An example of this could be the oil industry. Another characteristic of an oligopoly is when products are largely undifferentiated, prices are similar, and there is rarely price competition. Additionally, the numbers of buyers and sellers and the barriers to entry that confront a new competitor entering a market are significant elements in the macroeconomic context in which prices are determined and set [Doyle, p. 303].
Doyle, C. (2016). A Dictionary of Marketing. Oxford: Oxford University Press.