The price of goods is a universal regulator of producer-buyer relations. This is the very indicator due to which the product will be bought (or not bought) and, accordingly, the seller will be able or will not be able to carry out its activities.
The right price choice is the key to the success of the financial policy of the producer. In world trade practice, enough information has been accumulated on the basic principles of pricing and the factors affecting them.
What determines the price?
Consider the main factors affecting the formation of market prices. There are several of them:
- The number of market entities (sellers and buyers). The larger their number, the less price fluctuation.
- The independence of these entities. As a rule, the fewer sellers or buyers in the market, the more opportunities they have to influence price formation.
- Variety of product range. The larger it is, the more stable the position for certain types of products.
- External constraints (temporary fluctuations in the ratio of supply and demand, government regulation, etc.).
How is the price formed?
The real price is the number of units of a certain currency that the buyer must give to the seller. The basic rule here is that the more inaccessible (exclusive) a product is, the more expensive it is, and the less willing to purchase it. The lack of certain goods for consumers forms a higher price for each unit, which automatically reduces demand and equalizes it with supply.
Fluctuations in prices for any groups of goods affect their output. When the price rises, the production and sale of this product becomes attractive to a large number of manufacturers. As a result of market saturation, prices are dropping. Some producers are forced to leave the game.
Thus, prices force manufacturers to regulate the amount of manufactured goods. This is due to such a thing as demand.
Demand as a Concept
Any person needs a variety of material benefits. He does not create the absolute majority of them on his own, but comes to the market for them. But to acquire the desired buyer must have a certain amount of money. Needs, confirmed by the ability to pay for what is needed, are the demand.
Thus, demand characterizes the relationship between the mass of goods that people are willing to pay, and their price. That is, demand directly depends on the price. When changing the price of goods, the seller must calculate how this will affect demand and, accordingly, sales.
The pricing mechanism is based on a conflict of interests between sellers and buyers. This largely spontaneous process operates continuously and is characteristic of any market economy.
Another component of this mechanism is supply, that is, the volume of output that manufacturers are currently ready to offer the consumer at a certain price. Probably, everyone has heard that the result of a “meeting” of supply and demand is just the real price of a product or service.
Red price - what is it?
The market price or the price of equilibrium - exactly the one at which the goods will be exchanged for money - no more, no less. Is a product always offered for sale at a price close to real? How to evaluate the "fairness" of the requested amount? It is no secret that the rise and fall in demand (and with it prices) for the same goods are influenced by a wide variety of factors - from seasonal fluctuations in demand to leaked information about the poor quality of the product.
It was precisely when trying to subjectively assess the “legitimacy” of the seller assigning a particular payment for a product or service and the term “red price” was probably born.
What does he mean? Most people have heard it over their lives more than once, and "in everyday life" everyone roughly understands what they are talking about. But let's see how dictionaries interpret this concept .
Give the encyclopedia!
The economic dictionary interprets it as the highest, that is, the highest price that can be paid for any product. A dictionary of synonyms and a phraseological dictionary are in agreement with him.
At the same time, according to the definition given by the legal dictionary, the term "red price" has two meanings at once. The first of them is the price that will suit both parties to the transaction - both the seller and the buyer. The second value is the amount that the buyer calls in response to excessive (in his opinion) the seller’s requirements.
It is in this last meaning that the concept of “red price” has taken root both in everyday life and in Russian literature. "Yes, he has a red price - a penny!" - they usually talk about cheap or low-quality goods that they try to sell at exorbitant prices.
This concept is found precisely in this meaning in the works of Russian classics, for example, in “Dead Souls” by N.V. Gogol or in “Peter the Great” by A.N. Tolstoy.
Thus the expression came into use. And currently it is used most often in this sense.