4.8 Relative pricing freedom
Relative pricing freedom decreases from Expert to Commodity Orientation.
A renowned tailor (Expert) has greater freedom in setting the price of a suit for an individual client than a clothing company (Product maker) selling its brand-name clothes on the general market.
However, if a product is unique, the Product maker still has more pricing freedom than the store (Self-Service) selling it.
The Commodity owner has no pricing freedom at all, as the Market determines the commodity’s price. This lack of freedom comes with significant price fluctuations—while the price of a car remains relatively stable for years, the price of a commodity can change substantially within a short period.
The reason for larger price fluctuations in the Commodity Business Orientation is its greater exposure to unpredictable behavioral influences. The price of gold has more to do with people’s perception of intrinsic value and overall market sentiment than with the cost of production.
Limited pricing freedom also affects commoditized goods and processes.