Companies decide how much to charge based on what people are willing to pay. Imagine you're selling cookies, if people are happy to buy a cookie for $2, but would walk away at $3, you might choose $2 so more people will buy them. But if the ingredients cost a lot, you might set the price higher so you still make money.
Examples
- A candy store sells gummy bears for $1, but raises the price to $2 when the cost of sugar increases.
- A restaurant offers a special deal: $5 for a burger on Monday, but $7 on Saturday.
- A toy company puts a $30 tag on a popular action figure because it knows kids will buy it.
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See also
- Why Do We Have Different Kinds of Taxes?
- Why Do Prices Change So Much?
- Why Do We Use Money Instead of Bartering?
- Why Do Prices Go Up So Much When There's a Shortage?
- Why Do We Have Different Kinds of Coins?
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Categories: Economics · pricing,economics,business strategy