Most Prices Are Subject to Adjustment

Most Prices Are Subject to Adjustment

 

Because most firms are free, within broad limits, to adjust their prices at will, competent buyers can obtain better prices in direct proportion to their ability to analyze costs, markets, and pricing methodologies. Prices can be negotiated very little with firms operating in the markets of pure competition or monopoly. They can be negotiated a great deal with firms operating in the markets of imperfect competition. The question then is: What proportion of the nation’s total market falls within the area of imperfect competition? What percentage of a buyer’s total purchase is subject to price flexibility?

 

Studies made at the Graduate School of Business at Sanford University show that the nation’s economy is approximately 70 percent free and exists in the area of imperfect competition. The results of similar studies by other authorities support this conclusion. Buyers in most purchasing situations therefore have considerable latitude for negotiating both price and service with their suppliers. However, every buyer should guard against the inducement of illegal price concessions. Buying personnel must understand the operation of federal and state restraint of trade laws.