A price maker is a company that has the power to influence or determine the price of its product or service in the market, rather than having to accept the prevailing market price.
- Large market share gives them pricing leverage over competitors
- Demand for their goods is inelastic – customers will still buy despite price changes
- Often an industry leader or monopoly provider of essential products
As a price maker sets their own list prices, other firms have to price accordingly or risk losing sales. Factors like brand strength, proprietary tech, scarce resources enable this pricing power.
Benefits include optimizing profits. But risks exist of political or regulatory backlash if pricing is deemed exploitative over consumers.
Most companies operate as price takers – having minimal influence individually and adjusting prices based on market conditions and competition. But innovation can sometimes create temporary price-making advantages.
Overall, while controversial, moderate price making ability signals a healthy degree of favorable free market positioning when not excessively leveraged.