The price is one important element of the marketing mix, as it is the only one which adds value to the business. Price is very dependent on the customer demand for the service. Generally, as price goes down, the quantity demanded rises, and as price rises, the quantity demanded goes down. This may suggest that prices are inversely related to demand. However, at times, customers perceive that higher prices could be an indicator of high quality. The relative responsiveness in demand to changes in price is known as elasticity. An elastic demand is one where a change in price greatly changes demand. An inelastic demand is one where a change in price has a little effect on demand. Therefore, customers’ demand for products is not always related to their price. There are other elements which could affect their purchase decision.
Elaborated by Media Suite, Greece
Keywords: Determining Demand, Setting Prices, Elastic Demand, Inelastic Demand, Airline Demand, Prestige Pricing, Penetration Pricing, Cost-Based Pricing, Break-Even Chart, Volume Pricing, Differential Pricing, Uniform Pricing, Revenue Dilution, Competition, Destination Management
The material “Fundamentals of tourism” is elaborated under the project “Transnational Educational Network for young people – new technologies and entrepreneurial thinking in the tourism industry” with acronym TRANS-EDU-NET, BMP1/1.3/2290/2017 and MIS code 501742, co-funded by the European Union and National Funds of the participating countries on behalf of Laboratory of Heat Transfer and Environmental Engineering (LHTTE), Aristotle University of Thessaloniki (AUTh), being a Partner 4 in the project. The content of this material or parts of it cannot be copied or used without the prior written consent of Laboratory of Heat Transfer and Environmental Engineering (LHTTE), Aristotle University of Thessaloniki (AUTh).
