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Finance GlossaryDifferential Pricing
Differential Pricing
Definition of Differential Pricing
Differential pricing is a strategy that involves setting different prices for the same product or service based on the type of customer or tming.
For example, a zoo ticket may cost Rs. 10 for domestic visitors and Rs. 100 for international visitors. Or, when buying a product gets costlier as and when the last date for the sale approaches.
That’s why differential pricing is also known as discriminatory pricing and variable pricing.
For example, a zoo ticket may cost Rs. 10 for domestic visitors and Rs. 100 for international visitors. Or, when buying a product gets costlier as and when the last date for the sale approaches.
That’s why differential pricing is also known as discriminatory pricing and variable pricing.
Related Terms
Leverage In Stock Market
Leverage is a loan that a broker offers to allow traders to take up bigger positions by paying lesser capital. This feature is known as Margin Trading Facility (MTF) or simply margin funding. Leverage is often represented as a multiple like 2X, 3X, 4X, 5X and so on. For example, getting 5X leverage on a trade worth ₹1,00,000 means you’ll pay ₹20,000 and the broker will cover the rest of the ₹80,000.
Yield
Yield is the income generated from an investment, expressed as a percentage of its price or value. For example, a bond paying ₹50 annually on a ₹1,000 investment offers a 5% yield, helping investors compare income potential across different assets like bonds, dividends, or fixed deposits.
Out of the Money (OTM)
An option contract is said to be out of the money (OTM) if it would not be profitable to exercise the contract immediately. Options with no intrinsic value; call options with a strike price higher than the current market price, or put options with a strike price lower than the market price. OTM options are less expensive than ITM options. Indian F&O traders often purchase OTM options for leveraged bets, though they expire worthless if the market doesn't move favourably.
Ichimoku Cloud
Ichimoku Cloud is a group of technical indicators that’s used to understand trends, momentum, support,
and resistance by calculating averages.
Furthermore, the Ichimoku Cloud indicator is made up of two components:
- TenkanSen: The short-term indicator
-
KijunSen: The long-term indicator
There’s a cloud that’s formed as a result of plotting the averages and using the components on a chart.
One glance at this cloud can tell you multiple things like:
- Uptrend: If the price is above the cloud
- Downtrend: If the price is below the cloud
- Neutral: If the price is in the cloud
Moreover, if the cloud and the price are moving in the same direction, there’s much more confidence in the
trend that’s forming. In fact, it’s a trading signal.
Cash Commodity
A cash commodity refers to physical goods like aluminium, cotton, gold, silver, zinc, and other tangible goods which are delivered to a trader or company most commonly after exercising derivatives like options and futures contracts.
Cash commodities are also known as actuals. A derivative contract for cash commodities will explicitly state the delivery date, price, and quantity. These details are necessary as some contracts may not involve the delivery of goods.
Cash commodities are also known as actuals. A derivative contract for cash commodities will explicitly state the delivery date, price, and quantity. These details are necessary as some contracts may not involve the delivery of goods.
Contingent Liabilities
A contingent liability is shown on a balance sheet for an event that may or may not happen in the future. The potential liability arising out of such an uncertain event is recorded as a contingency in both GAAP and IFRS accounting standards.
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