Threshold Price

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Threshold Price

The price that psychologically encourages a potential buyer to purchase a product. For example, a company may price a product at $19.99 because it finds that it begins to lose buyers at $20. This maximizes the company's revenue because it makes slightly less money from significantly more buyers.
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References in periodicals archive ?
In practice, identifying threshold prices will be complicated.
(6) For lease sales in 2004-2005, the threshold prices in late 2006 were $41.39 per barrel for deepwater oil and $6.90 per million Btu for deepwater natural gas.
Such thresholds establish a maximum price per barrel of oil or million Btu of natural gas where producers may receive royalty relief; above the threshold price, royalties must be paid.
Thus, the optimal strategy for these decisions takes the form of four threshold prices, which are determined by a number of parameters, including those reflecting the industry features and the status of timberland holding.
Changes in any of the related parameters will cause the operation decisions to be made at different threshold prices. The effect of timberland ownership is captured by altering fiber sources and therefore the magnitude of [C.sub.v].
To look at how a change in market volatility will affect those threshold prices, suppose that the market volatility decreases by 5.0 to 19.4 percent.