Market-Value Pricing by Gabriel Steinhardt

Author:Gabriel Steinhardt
Language: eng
Format: epub
ISBN: 9783030107345
Publisher: Springer International Publishing

4.12 Market-Will-Bear Pricing Strategy

The Market-will-bear pricing strategy, also referred to as target-pricing or monopoly-pricing, is an attempt at charging the highest possible price without running into harsh negative consequences. An estimated 8% of technology companies attempt to use market-will-bear pricing.

The market-will-bear pricing strategy uses unfair competitive advantages and market dependencies as the primary decision factor in determining the product’s price.

For example, OPEC (Organization of Petroleum Exporting Countries) attempts to manipulate and maintain a high price for oil, mainly through limiting supply via production quotas. In addition, electric companies, the pharmaceutical industry, financial and banking services, and even governments, all border on the market-will-bear pricing strategy.

A short-term type of the market-will-bear pricing strategy is Price Gouging. Price gouging, a felony in the United States, is the legal term for excessively charging for essentials (such as drinking water) during civil emergencies. Price gouging is a unique occurrence that is characterized by vendors who are willing to supply their product at an excessive price rather than compete with each other by lowering the price of their products. The only remedy to price gouging is governmental regulation.

Another notable felony in the United States is Price Fixing. In price fixing, two or more parties conspire to sell their competing product at a set price. Price fixing is wrong because it establishes a barrier to entry, impeding innovation, slowing economic growth, and reducing quality of living by overcharging consumers.

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