The price

The price is the only marketing mix element that generates income, the rest of the elements causing expenses or investments. The company recovers through price the expenses caused by production, distribution and advertising operations, resulting in profit if the income is greater than the expenses.
The price is also the most flexible element of the marketing mix, it can be easily modified, compared to the other variables. Also, it is the most noticeable for the competitors who can react very prompt to any change.

On the other side, price flexibility is limited by factors like: In economic theory, the price results from the demand-supply ratio on a certain market, creating the balance on the market. Therefore, confronting the demand and the supply, an equilibrium price results, where the supplied quantity equals the demanded quantity.

But the market has imbalances that cause the products to be traded at prices different from the equilibrium price. For this reason, marketing uses the possible price concept, defined by: When determining the price, the following should be considered: