FAIR PRICING

2 Prices Theories
1. Man is entitled to enjoy the fruits of his labor and as an effect sets a price he deems reasonable for his
produce
2. Price depends on the law of supply and demand.

Determining a fair price

 In a fixed-priced system, fair price is when a seller gives the lowest price for his good that he is willing to
accept no other forces within.
 In a bargaining or a movable price system, fair price is when price tends to reach the lowest point possible
due to strict competition.

Factors of fair pricing

1. Cost of materials
2. Operating and marketing expenses
3. Reasonable profit margin.

Ethical issues of fair pricing

1. TRUE COST OF THE PRODUCT IS CONCEALED.
Most companies do not show the real cost behind the price of their products for confidentiality purposes. For
seller, this information is part of their trade secrets, one that allows them to compete effectively with the other
players in the industry. But a buyer would think that it is not fair to conceal such information to them since they
wouldn’t know that a seller might be taking the advantage of overpricing their products.
2. SUGGESTED RETAIL PRICE (SRP)
For some producers a suggested retail price serves as a price floor for a retailer. But sometimes, retailers do
not really agree to what was suggested since it will deprive them from giving a certain amount of discounts
promise to buyers. Thus a SRP makes determining a doubtful and suspicious.
3. USE OF ELECTRONIC SCANNERS
The vulnerability of these electronic scanners to manipulation, misuse and system failure doesn’t prove a fair
pricing method.
4. PROMOTIONAL PRICING
The use of odd price policy has a psychological impact on consumers making them believe that they are
paying a lesser price. Odd price policy is the process of using prices like 49.99 pesos instead of 50.00 pesos.
 Sales in malls and stores add up to the issues concerning promotional pricing. Although I have not
experienced it first-hand but a lot have been said about malls hiking up the prices of products a few days
before the sale date so that when the sale comes and they have to mark down prices, it would only return
back to its regular price but making an impression to the buyers that he had bought the product at a lesser
price.
5. FOLLOW THE LEADER PRICING
This is done to purposely make the buyers believe that what is being sold is same as the well-known brands.
It takes the impression that products that are priced higher have better quality while in fact they can be sold
for less. An example I can cite are those imported Hong Kong/Bangkok clothing that sells at high priced in a
well- groomed high class boutiques in malls that can only be sold at a cheaper price in a Chinese store
downtown.
6. PRICE GOUGING
This can already be considered as swindling since it takes advantage of economic situations. Price gouging
like that during the wake of the storm Ondoy was controlled by DTI by setting ceiling prices on areas
considered to be on astate of calamity.
7. PRICE FIXING
Uses the power of the retailers among the producers correspondingly controlling the product price. Price fixing
usually occurs in an oligopoly type of market where there are few sellers that forms a cartel to set for the price
of such product just like OPEC or the Organization for Petroleum Exporting Countries. Setting fair price
depends on different market structures. For a perfect completion, a fair price is balanced between the price a
seller sets and the willingness of the buyers to pay while on an imperfect competition which is where reality
occurs the price is determined by the supply and demand. But for St. Thomas Aquinas, a just prices is set
when both seller and buyer received exactly what they deserve.

Conclusions
1. Fair price is therefore a balance between the buyer and the seller. Sellers must set prices high enough to
make profit but not too high for consumers to think the price is unfair. Both sellers and buyers in the pursuit of
the interest to gain ample amount of profit and to acquire the best value they’ve paid for, respectively, gives
way to fair pricing.