Noun

price (plural prices)

1. The cost required to gain possession of something.
2. The cost of an action or deed.
   • I paid a high price for my folly.

Derived terms

• price stability

Verb

to price (third-person singular simple present prices, present participle pricing, simple past and past participle priced)

1. To determine the monetary value of (an item), to put a price on.
2. (obsolete) To pay the price of, to make reparation for.
   • 1590, Edmund Spenser, The Faerie Queene, I.ix:

     Thou damned wight, / The author of this fact, we here behold, / What iustice can but iudge against thee right, / With thine owne bloud to price his bloud, here shed in sight.

In ordinary usage, price is the quantity of payment or compensation given from one party to another in return for goods or services.

In all modern economies, the overwhelming majority of prices are quoted in (and the transactions involve) units of some form of currency. Although in theory, prices could be quoted as quantities of other goods or services this sort of barter exchange is rarely seen.

Price can sometimes alternatively refer to the quantity of payment requested by a seller of goods or services, rather than the eventual payment amount. This requested amount is often called the asking price or offer price, while the actual payment may be called the transaction price or traded price.

Economists view price as an exchange ratio between goods that are exchanged for each other. In the case of barter of two goods in the quantities x and y, the price of a unit of the first good is the ratio y/x, while the price of a unit of the second good is the ratio x/y.

This however has not been used consistently, so that old confusion regarding value frequently reappears. The value of something is a quantity counted in common units of value called numeraire, which may even be an imaginary good. This is done to compare different goods. The unit of value is frequently confused with price, because market value is calculated as the quantity of some good multiplied by its nominal price.

Theory of price asserts that the market price reflects interaction between two opposing considerations. On the one side are demand considerations based on marginal utility, while on the other side are supply considerations based on marginal cost. An equilibrium price is supposed to be at once equal to marginal utility (counted in units of income) from the buyer's side and marginal cost from the seller's side. Though this view is accepted by almost every economist, and it constitutes the core of mainstream economics, it has recently been challenged seriously.

There was time when people debated use-value versus exchange value, often wondering about the paradox of value (diamond-water paradox). The use-value was supposed to give some measure of usefulness, later refined as marginal benefit (which is marginal utility counted in common units of value) while exchange value was the measure of how much one good was in terms of another, namely what is now called relative price.