The term price refers to the fact that things are given a representative value both in quantity and quality in order to be part of the system of exchange of products and goods of society known as buying and selling. Different cultures throughout the evolution of man have adopted the term to correspond to something that someone has to pay, prehistoric and ancestral societies such as the Mayas and the Incas paid a sacrifice to the gods, mostly with human blood.

What is price

This term refers to the amount that is needed to be able to acquire a good or service, even an object. This usually occurs monetarily, that is, through the different types of money that exist, but it depends on the region.

In history, the type of payment has changed in form and origin, the most common is a monetary payment and in the purchase and sale relationship, it is common to associate the dependence of the trade with the local currency or in some cases foreign.

There are some television series that carry this term as their title, for example, the television programs the Price of history and the Price of tomorrow.

This term comes from the Latin “Pretĭum” which means “price or reward.”

Price characteristics

Among the characteristics of this term, there is the fact that it is measured through monetary units, which are assigned a certain value and that, in addition, changes or is different according to the region in which it is carried. carry out a transaction. These are carried out to be able to carry out purchase and sale operations, either in goods or merchandise.

In addition to this, the price is responsible for reflecting the relationship in the exchange of services and goods that are accessible within the market, so it is also subject to State regulations, supply and demand and, in exceptional cases, the regulation.

Price fixing

The value of a product is placed according to the quality with which it is manufactured, its origin and of course and not more importantly, the reputation and fame of the brand that markets it. There are many shirts, but they can cost 10 pesos of any brand or cost 100 pesos but be from a renowned brand, even if they are so similar that the reason for the monetary difference between one and the other is hardly perceived.

Price variation

Price - Price variation

For its part, the prices placed on a service go according to the attention given to the client, the quality of the service depends on the professionalism with which the server does it, in the same way, monetary variety is contemplated in the services of According to the place or company that offers it, for example, a massage session in a spa without recognition can cost 100 pesos, but in a spa of a famous hotel this same massage can have a value of 1000 pesos.

Price types

The types of prices refer to the strategies that can be used to define the real value of a product and these are classified as follows.

Official price

It is the amount that the government stipulates that must be paid to obtain different goods, for example, the price of gold, the price of the dollar and the price of gasoline.

Fixed price

This is known as the value given to a merchandise or product and that cannot be reduced or be subject to haggling.

Final price

It is the one that is stipulated after calculating the VAT, real value, transfer of the merchandise, among others.

Gross and net price

The net amount is the one to which all the rebates and reductions have already been made, also deducting taxes. The gross amount is that to which the reductions and rebates have not yet been made.

Offer price

It is the one stipulated by the seller to be able to offer their products or merchandise, for example, the price of the iphone.

Sale price

It is one in which the real value of the product is estimated so that it can be sold, without taking into account deductions for taxes or discounts.

Market price

It is that real amount at which a good or service can be sold or bought within an open market, at a specific time.

Wholesale and retail price

The wholesale amount is that stipulated for manufacturers or distributors for a good or product, this is offered to retail establishments, while retail is the one set by retail establishments who increase the value a little in order to generate profits by selling. exactly the same product. An example of this can be the price of the Nintendo Switch.

Unit price

It is a stipulated value for the unit of the products, so that they are sold in detail. For example, the price of antibacterial gel in retail stores.

Equilibrium price

This represents an alternative approach to the balance of payments surplus or deficit in fixed exchange rate systems. Economists use it to help determine long-term trends in a country’s balance of payments.

The measure is less sensitive to short-term fluctuations in interest or exchange rates, providing a long-term view. The basic balance incorporates fluctuations in international investment in the capital account, making it more sensitive to long-term changes in a nation’s productivity.

Difference between price and cost

The differences are wide, however the most important are:

  • The price is generally set by the market based on competitiveness. The cost, for its part, is established by the company based on the expenses related to the production process of the good or product.
  • Price represents the sum of costs plus profits. While the cost represents the sum of all the disbursements related to the manufacture, production and marketing of the product.
  • The price can fluctuate depending on the supply and demand. While the cost can fluctuate depending on the area of ​​origin of the raw material, labor costs, etc.

Frequently Asked Questions about Pricing

What are the prices?

They are the representative values ​​of the goods, services or objects.

How are prices determined in the market?

Prices in the market are set freely through competition between companies, meaning that these will fluctuate depending on demand or supply.

What is the official price?

It is the amount that the government stipulates that must be paid to obtain different merchandise.

What is the final price?

It is one in which VAT, costs, among others are included.

What is the function of prices?

Give value to a good, service or object and generate profits.