THE PROBLEM OF FAIR PRICE

ethical issue and problem in business and the corporate world

THEORIES OF PRICE

• man is entitled to enjoy the fruits of his labor and as an effect

sets a price he deems reasonable for his produce

• price depends on the law of supply and demand

How do we determine a fair price?

• 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.
 How do we determine a fair price?

• bargaining or a movable price system, fair prices when

price tends to reach the lowest point possible due to
strict competition. But generally, fair pricing is one that
man has not yet resolved.
•
Factors to be Considered

• cost of materials

• operating and marketing expenses

• reasonable profit margin

Ethical issues in 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. 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 repaying 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.
6. PRICE GOUGING
- This can already be considered as swindling since it takes
advantage of economic situations (during storms or natural calamities).

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.
REFERENCES:

https://prezi.com/mbhynboiihpt/p
roblems-of-fair-pricing/

https://www.scribd.com/doc/1435
90871/The-Problem-of-Fair-Pricing

https://en.wikipedia.org/wiki/Pric
e