Fixed price

A fixed price is a set cost for a product or service that no longer be changed, at least for a given period of time. It is not possible to negotiate on this price. Perhaps one of the most common examples of this is the price of clothing in a boutique during a non-sale period. The price indicated on the tag is a fixed price, as far as the seller and end user are concerned, and haggling, done in flea markets or rummage sales, is unacceptable.

On a larger scale, the implementation of fixed pricing on certain goods or services is in accordance with the conditions specified in a contract. If the agreement reached states that a certain price will be paid for specific goods within a set period of time, then this holds all throughout the duration of the contract. The buyer cannot really expect any form of price reduction, in such a case. Fixed pricing, although seemingly restrictive at first, can actually be a good option for the buyer, because he is given a clear idea from the very beginning, about how much is to be spent. He can therefore plan other business activities and processes accordingly.

On the other hand, variable pricing, which is taken as the opposite of fixed pricing, gives the parties involved some allowances for price negotiation. This can be good for either of the parties, depending on the conditions set. Variable pricing usually seems to be a better option for the buyer, but can prove advantageous for the supplier in instances wherein prices can be raised if the cost of raw materials or production suddenly goes up before all of the goods have been produced and delivered.