Price-floor pricing assumes that two market segments exist and that there would be no loss in sales with the inelastic segment if lower prices are offered to the elastic segment.

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Price-floor pricing is a pricing strategy that sets a minimum price for a product or service. This strategy is often used when there are two distinct market segments, one of which is inelastic and one of which is elastic. The inelastic segment is less responsive to price changes, while the elastic segment is more responsive to price changes. By setting a price floor, the seller can ensure that they will not lose sales to the inelastic segment if they offer lower prices to the elastic segment.

Price-Floor Pricing Assumes That Two Market Segments Exist and That