What is a “price point,” really?

Posted by Milos Sugovic

There’s a faddish bit of marketing jargon that’s overused and makes absolutely no sense to me: the infamous “price point.” To the users of such lingo, I sincerely ask: what does it mean and how is it any different from that other short word that frequently does the trick - price?

You see, what puzzles me most about “price point” is the following: I’ve studied economics for the past seven years (and counting) and have been exposed to a whole range of topics at four different universities, one of which happens to be the London School of Economics. Never, and I repeat never, have I heard a professor of economics juxtapose the words “price” and “point.” And you know why? Because it’s meaningless.

In fact, to prove my point I did some research on this phrase we seem to love too much. Google “price point” and see what comes up. Once you get past the irrelevant junk, such as a mountain bike seller and information on Texas hospitals, you might be drawn to a Wikipedia article as well as an article in the [email protected] publication.   

So, let’s look at the Wikipedia article first: It defines price points as, and I quote, “prices at which demand is relatively high.” Now I don’t know about you, but that sounds like utter nonsense to me. Are prices at which demand is relatively low not “price points” as well? Oh, I should mention the post comes with the following warning: “This article does not cite any references or sources.” I rest my case on that front.

Now, let’s turn to the Wharton article. The phrase “price point” appears in the title while the body, which is comprised of 2210 words, does not include even a single mention of the phrase. See for yourself.

At any rate, before I put this one to rest, I decided to do one final check, so I searched for the phrase on none other than Repec.org, the world’s largest and most up-to-date collection of on-line economics working papers and journal articles. I found four articles that use “price point” and one is none other than a working paper by the American Association of Wine Economists. 

So what’s the moral of the story? Before you start throwing around jargon that’s supposed to make you sound smart, think about where it comes from. If the experts in the field don’t use it, there’s a pretty good reason why.