Pricing Power

Pricing Power

Pricing Power Jonathan Poland

Pricing power refers to a company’s ability to increase prices without significantly impacting demand for their products or services. This can be a powerful tool for a business, as it allows them to generate higher revenue without necessarily having to increase their production or sales efforts. However, it is important for companies to use this power wisely, as consistently raising prices can ultimately lead to a decrease in demand over time, as well as the potential for new competitors to enter the market. The following are types of pricing power.

In many cases, a monopoly has a great deal of pricing power as they have no direct competition. For this reason, it is common for monopolies to be regulated. For example, a telecom company that owns all the networks in a city could raise prices for internet access extremely high and people would need to pay as it is an essential service.

Luxury Goods
Brands with high social status enjoy significant pricing power. If a luxury brand lowers prices they typically enjoy a spike in sales but their brand may quickly lose brand value. As such, luxury brands have incentive to maintain high prices.

Differentiated Products
Products and services that are viewed as superior by customers. For example, a popular mobile device offered by a strong brand may easily command both a higher price and greater market share than the closest competition.

Niche Products
Products and services that offer something unique that is valued by a small subset of customers. Niche products may enjoy significant pricing power depending on the niche and their position in the market.

A commodity is something that customers view as undifferentiated. Firms selling commodity products have no pricing power whatsoever and must accept market prices.

Learn More…

Marketing Message Jonathan Poland

Marketing Message

A marketing message refers to any media or communication that is intended…

Management Levels Jonathan Poland

Management Levels

A management level is a layer of accountability and responsibility in an…

Performance Feedback Jonathan Poland

Performance Feedback

Performance feedback is any type of communication that evaluates an employee’s work…

Calculated Risk Jonathan Poland

Calculated Risk

Calculated risk is an essential concept in the field of risk management.…

Phased Implementation Jonathan Poland

Phased Implementation

Phased implementation is a method of developing and introducing a business, brand,…

What is Leadership? Jonathan Poland

What is Leadership?

Leadership is the act of guiding and directing a group towards a…

Target Market Jonathan Poland

Target Market

A target market is a specific group of consumers that a business…

Dynamic Pricing Jonathan Poland

Dynamic Pricing

Dynamic pricing refers to the practice of changing prices in real time…

Key Strengths Jonathan Poland

Key Strengths

Key strengths are talents, character traits, and knowledge that are particularly relevant…

Jonathan Poland © 2023

Search the Database

Over 1,000 posts on topics ranging from strategy to operations, innovation to finance, technology to risk and much more…

Objection Handling Jonathan Poland

Objection Handling

Objection handling is the practice of addressing and overcoming concerns or hesitations…

Business Optimization Jonathan Poland

Business Optimization

Business optimization is the ongoing process of evaluating the efficiency, productivity, and…

Big Picture Thinking Jonathan Poland

Big Picture Thinking

“The big picture” refers to the broadest possible perspective that can be…

Vertical Integration Jonathan Poland

Vertical Integration

Vertical integration is when a single company owns multiple levels or all of its supply chain.

Rebranding Jonathan Poland


Rebranding is the process of making significant changes to a company’s brand…

Employee Engagement Jonathan Poland

Employee Engagement

Employee engagement is a measure of how motivated, committed, and involved an…

Conformance Quality Jonathan Poland

Conformance Quality

Conformance quality refers to the production of products and delivery of services…

Factor Market Jonathan Poland

Factor Market

The factor market, also known as the input market, is the market…

Business Capability Jonathan Poland

Business Capability

A business capability is a broad term that refers to the things…