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. Financial Distress

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  2. Distressed Sale

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  3. Price Fixing

    Price fixing is setting the price of a product or service, rather ...
  4. Operating Cost

    Operating costs are expenses associated with the maintenance ...
  5. Unit Cost

    The cost incurred by a company to produce, store and sell one ...
  6. Distressed Borrower

    A borrower who is unable to fully repay his or her debt due to ...
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