Price-setting behaviour: insights from a survey of large firms

Richard Morris and Rupert de Vincent-Humphreys

Economic Bulletin Boxes, 2019, vol. 7

Abstract: This box summarises the findings of an ad hoc ECB survey of leading euro area companies about their price-setting behaviour, covering various dimensions. Among the findings, it was seen that firms mostly vary their prices by geographical market and by type of customer, but much less so depending on the sales platform. The frequency of price reviews and changes varies significantly across sectors, with weekly or even daily price changes being common for some retailers, while in some parts of the services sector annual price changes are more typical. Manufacturers tend to review prices monthly but change them only on a quarterly, semi-annual or annual basis. Increases in average selling prices are achieved, to a large extent, by introducing new products with higher value content. When reviewing prices, firms pay most attention to costs and competitor prices, with the latter being particularly important for consumer-facing firms. Many factors contribute to sluggish price adjustment: pricing strategies are based on broadly stable costs and margins, a fear that competitors will not follow suit and, for consumer-oriented firms, a focus on pricing points and an understanding that customers expect prices to remain stable. JEL Classification: D4, E3, L1

Keywords: Price-setting (search for similar items in EconPapers)
Date: 2019-11
Note: 646140
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