Inflation and Product Pricing

[Graybeard]

There are two main types of inflation: demand-pull inflation and cost-push inflation. ​

Demand-pull inflation occurs when there is too much money chasing too few goods. This situation is often caused by an increase in money supply or a decrease in the supply of goods. When there is a shortage of goods, businesses will raise prices to increase their profits. This will cause the cost of living to rise and the purchasing power of money to decrease.

Demand-pull inflation is an economic theory that describes how inflation can be caused by an increase in aggregate demand. The theory suggests that inflation can be caused by an increase in demand for goods and services, which in turn drives up prices. The theory is based on the work of John Maynard Keynes, who argued that inflation is a result of too much money chasing too few goods.

Cost-push inflation, on the other hand, is caused by an increase in the cost of production. This can be due to higher prices of raw materials, wages, or energy. When production costs go up, businesses will pass on the higher prices to consumers in the form of higher prices for goods and services. This will cause the cost of living to rise and the purchasing power of money to decrease.

Inflation can have a number of negative effects on an economy. It can lead to higher interest rates, which can discourage investment and reduce economic growth. Inflation can also erode the value of savings and reduce the purchasing power of consumers.

Demand-pull inflation can be particularly harmful to an economy when there is a shortage of goods. This is because businesses will raise prices to take advantage of the situation. This can cause a spiral of inflation as businesses continue to raise prices and consumers are forced to pay more for goods and services.

​

Product or service pricing uses the same principles​

• Demand-pull, or;
• Cost-push.

Even in a non inflationary economy, or when there is actual deflation in an economy; these same principles apply to how your 'product' is priced.

If you are looking for a trending interest --inflation is number one on most people's minds today.

Inflation is a very strong CTA reasoning when used properly. You have to give a reason to buy now and always ask for the sale (conversion)