Purchasing power

Purchasing power is the value of money. It can refer firstly to a currency unit (e.g. DM) and secondly to certain people or groups of people (e.g. civil servants and employees, people in the catchment area of a retail store). In relation to a currency unit, purchasing power is the amount of goods or services that can be bought for a currency unit. Purchasing power or the value of money falls when the prices of goods and services rise and vice versa.

On the other hand, purchasing power for certain people or groups of people depends on the monetary value and on disposable income at the same time. This means that people with high incomes have more purchasing power than those with lower incomes. It is clear that purchasing power is a factor in determining the turnover of a retail business. Before setting up a retail business, it is therefore very important to determine the possible turnover based on the level of purchasing power in the catchment area, among other things.

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