Why do similar goods have different prices?
Because transaction costs exist and can vary across different markets and geographic regions, prices for the same good can also vary between markets.
Why does Amazon have different prices for the same product?
Amazon is a marketplace and don’t sell products on their own. Sellers get registered there and list the prices. There are many sellers for the same product who compete with each other to generate more sales. That is why you find same products with different prices.
How pricing of service is different than the pricing of products?
When pricing services, there is a bit more leeway than pricing products. “The price of a product is more objective. The price of a service is more subjective so that there is a gray area,” Toftoy says.
Why would a company ever offer a price on a product that is below its full cost?
Loss Leader At times, companies sell some goods below cost to provide service to its customers or to compete in a specific product line.
Can I sell the same product at different prices?
What Is Price Discrimination? Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. In pure price discrimination, the seller charges each customer the maximum price they will pay.
Why is pricing services so difficult?
Another inherent difficulty in most services is that the actual service costs do not adequately represent the value of the service to the customers. 6. Cost based pricing does not consider the price perception of the consumers. But it is difficult to apportion fixed costs in case of multiple service offering.
When should I sell my product below the price?
The only time you should consider selling below avoidable variable cost is when there will be significant ancillary sales to provide profit. For old models and obsolete items that will not be reordered or replaced, the money you spent to buy them is sunk and should not impact your decision.
Can two companies sell the same product?
It is not illegal. Also, to be clear, the same product can be sold in the same market at different prices. It doesn’t have to be nearby markets. It would only be illegal on the why you’re selling it at a different price, or if you are selling it above a posted price to some as it would be false advertising.
Why are prices of the same thing different in different markets?
This can lead to different prices for the same good in different markets even for otherwise easily transportable goods. While these price differences may earn big bucks for companies and governments, the real loser is the consumer who has to bear the brunt of high taxes, expensive infrastructure and high prices for regular goods.
Why does the price of a good stay the same no matter where it is sold?
The economic theory of purchasing power parity (PPP) predicts that the price of a particular good should remain the same no matter where in the world it is sold. In reality, however, PPP is often violated with some goods selling for more in one place than another, even after accounting for exchange rate differences.
Is it worth it to buy a similar product?
Sometimes the products aren’t exact replicas, but they’re similar enough that forking over big bucks for the brand-name version may not be worth it. For example, automobile manufacturers share costs by building a single platform for a couple of vehicle brands.
How to know the difference between price and value?
Leveraging differences between price and value is as simple as that. Find a company that you believe in, that has solid fundamentals — then wait until their price falls below their value. If you do this, you can buy companies on sale, sell them for their true value and make a lot of money in the process.
