Distress Price


DEFINITION of 'Distress Price'

When a firm chooses to mark down the price of an item or service instead of discontinuing the product or service altogether. A distress price usually comes about in tough market conditions when the sale of a particular product or service has slowed down dramatically and the company is unable to sell enough of it to cover the fixed costs associated with doing business.

BREAKING DOWN 'Distress Price'

A company will sometimes choose to mark down an item's price rather than discontinue operations completely because even at a distressed price, those revenues will help with covering some of the fixed costs associated with running the business. However, if the item can not be sold at a price greater than its variable cost of production, discontinuing the item is usually in the firm's best interests.

  1. Discontinued Operations

    A segment of a company's business that has been sold, disposed ...
  2. Financial Distress

    A condition where a company cannot meet or has difficulty paying ...
  3. Distressed Sale

    When property, stocks or other assets are sold in an urgent manner, ...
  4. Distressed Securities

    A financial instrument in a company that is near or is currently ...
  5. Operating Cost

    Expenses associated with the maintenance and administration of ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's ...
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