The goods correspond to all those goods that are physical or not capable of being bought or sold, that is to say, commercialized. Sometimes to refer to goods the name of goods can be used, both are perfectly valid and synonymous. The goods are considered as economic goods for the purpose that they can be traded. They are usually a partial or total part of the economic activity in which it is developed and exchanged. It is for this aspect that buyers and sellers of merchandise base their commercial and exchange relationships according to the nature and interest they have. This interest can come from the characteristics of the merchandise itself or the objectives pursued by the companies.
The ability to become a good that can be traded makes merchandise be considered as goods that energize trade and make the economy work. They include all physical goods such as raw materials (copper, oats, iron ...) or non-physical goods (patents, licenses, even shares of a company). The value of merchandise can fluctuate over time and as can be seen in their prices. The factors that can influence them are usually conditioned by the market situation at that time. To know what factors influence their prices, if they can affect upwards or downwards or according to the importance of a company, keep reading. Today's article is intended to take a closer look at the goods and understand them in their entirety from the different points of view and interests involved in them.
Factors influencing the price of goods
The price of goods may remain high or cheap, but in most cases their prices will fluctuate over time. All this will depend on the different factors that intervene in them. The most notable would be the following:
- For its abundance. Those less abundant goods tend to become more expensive as there are fewer and are more precious. If it is also essential merchandise in the manufacture of some products and they do not have substitutes, it causes the price to rise even more. On the contrary, less manufacturing or interest in being marketed will cause its price to decrease as there is less demand. It will also count the total availability of the goods. For example, palladium (used for example in catalytic converters) is very rare and its price is high, while water is very abundant and its price is low.
- If they have substitutes. In line with the aforementioned. If the goods are essential in the manufacture, elaboration or sale due to their characteristics, they usually have a higher price. Especially if other goods cannot be used due to their characteristics, that exclusivity makes them valuable. For example gold. If, in addition, a new good appeared that could be commercialized, that also generated a lot of demand, and could only be made with gold, that would cause the price to rise even more.
- For exclusivity. These exclusion rights are normally attributed to patents or trademarks. These restrictions to market the goods or services make those goods also increase or decrease in value. For example, a license can be valid for a few years, like a patent, and then give "free rein".
- The logistics used. The price of the goods may be subject to transport, storage, their place of origin, etc. All this infrastructure and logistics to trade with them can raise the price depending on the final location of the business. There is a time when, depending on the characteristics and value of some goods, companies can choose to modify their strategy in case they require it a lot or a little for their economic activity. This brings us to the next point.
The goods depending on the business vision
Whether the goods may be priced higher or lower will depend on the factors mentioned above. However, the "last word" lies more in the business approach that can be given. That marketing a merchandise is more profitable or not for a company, also it will depend on your profit margins. If the obtaining of the goods is highly influenced by the origin, a company (and depending on its size) may move if in this way its production becomes more efficient and profitable. On the contrary, the sale of your products or merchandise may be affected or rewarded, depending on the ease of its distribution. Deciding on these strategic changes will depend on the vision and objectives of each business.
This strategy and business vision can come to raise up to what point a merchandise is essential or not, to continue with the segment, or to reinvent itself, depending on the profitability that it can obtain from its final billing. It also influences the price paid for it and consequently the search for new alternatives. In the most extreme case, with no margin to be able to do without one or more goods with high prices, the company will have to be very clear about its viability and economic model.
Depending on the position of the business
Finally, not all businesses offer their products or market their goods at the same price. A sector may be with regulated prices (for example, tobacco in Spain), but as a general rule a company usually sets the price itself. This will make that sometimes the obtaining or distribution of the merchandise can be more or less profitable. If the turnover is high with high profit margins, for example Apple compared to the other smartphone companies, it has more room for maneuver.
Another example could be that of a company dedicated to the extraction of gold. Not all invest the same budget to obtain the ounces of gold. Those miners whose budget to obtain the same amount is lower could see the price of gold fall and even if they were less profitable they would continue to be. On the other hand, those who must invest a lot in gold extraction, would be the first to be harmed if they see that the price of the raw material they want to distribute falls.