Seller's Market Vs. Buyer's Market-Understanding the Basics

by Kori Rodley Irons | More from this Blogger

05 Jul 2007 05:38 PM

Unless you've taken a business course or two, or read a shelf of business books, you might not know what all the "business terms" mean. Periodically, I try to provide little bits of basic information about the business world that might help you as you build your home business. This evening, I thought I'd cover the difference between a "buyer's market" and a "seller's market" and how it might affect your industry.

In a "buyer's market"-the purchaser, customer or "buyer" has the advantage. This usually means that there are plenty of goods or services available at a low or affordable price and the buyer has his pick and choice of who he'd like to buy from. This gives him a leg up on negotiating as he can just take his business to the seller who can give him what he wants-price, service delivery, etc. As a business owner, when your industry is experiencing a "buyer's market" you may need to lower your prices, or do other things to become more competitive and you may not have the same strength in negotiating that you would otherwise have.

In a "seller's market"-the circumstances are just the opposite. Either because of high demand or lower availability, the seller has the advantage. This means that the customer may be forced to pay higher prices, wait longer for delivery or availability and that the seller has a stronger vantage point when it comes to negotiating. As a seller, you might not be feeling the pressure to compete on the same level that you will in a buyer's market.

In your own home business, you may be both a "seller"-providing your product or service to your customers and clients, and a "buyer"-purchasing supplies and services from other vendors. This means that your prices and your business operations can be constantly fluctuating based on who you are working with and what is going on in the various markets. An understanding of what is going on will help you to remain flexible and adjust to stay competitive.

See Also: How Specific Can You Tailor Your Service Delivery?

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