Price-determining agents are the economic players who define the offer price according to the genre of the sales object.
From a pricing perspective, there are three offer genres: commoditized, differentiated, and essential.
Commoditized are offers standardized, usually with low added value, and identical to others. Differentiated offers have additional qualities that distinguish them from competitors. Essential offers are necessary for human survival and health, especially in cases of extreme scarcity, and thus of great socio-economic relevance.
To each genre of offer corresponds a price specie and a price-determining agent, as we can see in the following table:
The buyer or the free competition sets the commodity prices. That is why they are called market prices. A commodity buyer can be a final consumer, a rural producer, a manufacturer, a supermarket, an importer, or any other. Free competition, in turn, implies the interaction of sellers and buyers that usually takes place in merchandise exchanges, public markets, commodity brokerages, public offerings, and open private tradings.
It is worth emphasizing that in both cases—price imposed by the buyer or resulting from market interaction—the offer is for a commodity within previously established standards, as any deviation from it can lead to increases or decreases in the final price.
The prices of differentiated offers are a provider’s decision and are known as the offer’s sales price. The denomination sales price is because it comes from the free will of the offerer/seller, who, considering the market opportunity, the offer cost, and the negotiation goals, sets the price that best suits him.
In its place, the prices of essential products or services, such as energy, transport, and drugs, are defined or controlled by a constituted authority and are called administered prices.
For the Organization for Economic Cooperation and Development (OECD), administered price is the value fixed by public policymakers to directly or indirectly establish prices for the domestic market or producer.
C. L. Eckhard, author of Pricing in Agribusiness: setting and managing prices for better sales margins.
Claudio Luiz Eckhard is a former professor, business consultant, and author of the books “Ajustando o Rumo”[Adjusting the Business Course], “Gestão pela Margem”[Management by Margin], “A Empresa Saudável”[The Healthy Company], and “Pricing no Agribusiness”[Pricing in Agribusiness].
