What is the main principle behind demand-oriented pricing?

The main principle behind demand-oriented pricing is that it adjusts prices based on the level of consumer demand. When demand for a product or service is high, prices are typically set higher to maximize revenue. Conversely, when demand weakens, prices may be lowered to stimulate sales. This approach allows businesses to capitalize on market conditions effectively, ensuring that they can optimize their profitability by aligning their pricing strategy with consumer interest.

This principle is rooted in the fundamentals of supply and demand economics, where price acts as a signal to both the market and the consumers, reflecting the scarcity or abundance of a product based on current demand levels. It emphasizes responsiveness to market conditions, making it a dynamic pricing strategy rather than a static one.