The pricing
technique used by most retailers is cost-plus pricing. This involves
adding a markup amount (or percentage) to the retailers cost.
Another common technique is manufacturers suggested list pricing.
This simply involves charging the amount suggested by the manufacturer
and usually printed on the product by the manufacturer.
In Western countries, retail prices are often so-called psychological
prices or odd prices: a little less than a round number, e.g.
$ 6.95. In Chinese societies, prices are generally either a
round number or sometimes some lucky number. This creates price
points.
Often prices are fixed and displayed on signs or labels. Alternatively,
there can be price discrimination for a variety of reasons.
The retailer charges higher prices to some customers and lower
prices to others. For example, a customer may have to pay more
if the seller determines that he or she is willing to. The retailer
may conclude this due to the customer's wealth, carelessness,
lack of knowledge, or eagerness to buy. Price discrimination
can lead to a bargaining situation often called haggling —
a negotiation about the price. Economists see this as determining
how the transaction's total surplus will be divided into consumer
and producer surplus. Neither party has a clear advantage, because
the threat of no sale exists, whence the surplus vanishes for
both.
