Pricing and negotiation

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailers cost. Another common technique is manufacturers suggested list pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.

In Western countries, retail prices are often called psychological prices or odd prices: a little less than a round number, e.g. $ 6.95. In Chinese societies, prices are generally either a round number or sometimes some lucky number. This creates price points.

Often prices are fixed and Price discrimination can lead to a bargaining situation often called haggling, a negotiation about the price. Economists see this as determining how the transaction's total surplus will be divided into consumer and producer surplus. Neither party has a clear advantage, because the threat of no sale exists, whence the surplus vanishes for both.