PRICE STRUCTURE Meaning and
Definition
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Price structure refers to the arrangement or organization of prices for goods or services offered by a business. It is a systematic framework that determines the different price levels or tiers for products or services based on various factors such as costs, competition, demand, and market conditions. The price structure outlines how prices are set, adjusted, and differentiated to optimize profitability while meeting customer needs.
The price structure typically includes various components, such as the base price, discounts, markups, and any additional charges or fees. It may also incorporate pricing strategies, such as price skimming, penetration pricing, or value-based pricing, to achieve specific business objectives.
In a price structure, the base price acts as a starting point and is influenced by factors like production costs, materials, labor, and overhead expenses. Discounts are commonly applied to encourage customer loyalty, bulk purchases, or promotional offers. Conversely, markups are added to the base price to cover expenses, allow for profit margins, or reflect exclusivity or brand value.
A well-designed price structure accounts for market dynamics, customer preferences, and competitive positioning. It aims to strike a balance between maximizing revenue potential and maintaining competitive advantage. Adapting the price structure over time may be necessary to respond to changes in demand, cost factors, or market conditions. Effective management of the price structure enables businesses to optimize sales, profitability, and customer satisfaction, ultimately contributing to long-term growth and success.
Common Misspellings for PRICE STRUCTURE
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Etymology of PRICE STRUCTURE
The word "price structure" does not have a specific etymology as it is a combination of two separate words.
The word "price" originated from the Old French word "pris", meaning "value" or "worth". It entered the English language in the late 13th century through the Anglo-Norman influence.
The word "structure" derives from the Latin word "structura", which refers to the action of building or arranging. It was first used in the English language in the late 16th century.
When these two words are combined, "price structure" refers to the arrangement or organization of prices. It describes how prices are structured or set for a particular product, service, or industry.
