Why does a coffee cost more at the airport than in town? Why are strawberries cheap in July and expensive in January? This lesson of Mondosol’s Make Money course is about prices: where they come from, why they change, and how to spot a good deal. Your host is Amara, our money coach who always asks: “What am I really paying for?”
Read the article, watch the short videos, or press play and listen on the go. On the platform, the interactive lesson lets you practise.
In this article
What a price really is
A price is the amount of money you give up to get something. It is a signal. It tells you how much people value a thing, and how easy or hard it is to make.
A price is not a fixed truth. The same bottle of water can cost very different amounts in a supermarket, at a train station or at a concert.
Supply and demand
Two forces set most prices: supply (how much of something is available) and demand (how many people want it).
- More demand, same supply → prices tend to go up. Think of concert tickets for a famous artist.
- More supply, same demand → prices tend to go down. Think of strawberries in summer.
- When the two meet, you get the market price: the price where buyers and sellers agree.
In winter there are fewer local strawberries but people still want them, so the price rises. In summer there are so many that sellers lower prices to sell them before they spoil.
Other things that move prices
- Costs: materials, wages, rent and energy. If they rise, the seller usually raises the price.
- Taxes: VAT is added on top of many prices. In Norway the standard VAT (MVA) is 25%, and 15% on most food.
- Location and convenience: you pay extra for having something right here, right now (the airport coffee).
- Brand: a famous logo can add a lot to the price of a very similar product.
- Competition: when many shops sell the same thing, prices usually stay lower.
Inflation: when everything gets more expensive
Inflation means prices in general rise over time. If inflation is 3% a year, a basket of shopping that cost 100 kr last year costs about 103 kr today.
That means the same money buys a little less each year. This is why saving money in a drawer slowly loses value, and why the power of saving and interest matters.
Central banks try to keep inflation low and stable. Norges Bank and the European Central Bank both aim for about 2% a year.
Compare smart: the unit price
The big pack is not always cheaper. To compare fairly, look at the unit price: the price per kilo, per litre or per 100 grams. In most European supermarkets it is printed on the shelf label.
| Product | Price | Size | Price per 100 g |
|---|---|---|---|
| Cereal, small box | 30 kr | 500 g | 6.00 kr |
| Cereal, big box | 50 kr | 1 kg | 5.00 kr |
Here the big box is cheaper per gram. But it is only a good deal if you will actually eat it before it goes stale. A bargain you throw away is not a bargain.
Watch: prices in one minute
Video: “Supply and Demand Explained in One Minute” by One Minute Economics, on YouTube.
Video: “Inflation Explained in One Minute” by One Minute Economics, on YouTube.
Try it: Amara’s price detective challenge
Next time you shop, pick one product you buy often and be a price detective:
- Find the unit price of two sizes or two brands. Which is cheaper per kilo or litre?
- Ask: why might this cost more here than somewhere else?
- Write the price down and check it again in three months. Did it change?
Amara’s rule: “Put it in the spreadsheet.” Even one line a month shows you how prices move in your own life.
FAQ
What decides the price of something?
Mostly supply and demand, plus the seller’s costs, taxes, competition and how convenient or famous the product is.
Why do prices go up over time?
Because of inflation: when prices in general rise, each krone or euro buys a little less than before.
What is a unit price?
The price for a fixed amount, such as per kilo, per litre or per 100 grams. It lets you compare different pack sizes fairly.
Is the biggest pack always the best deal?
No. It is often cheaper per unit, but only worth it if you use it all before it goes off.
Keep learning
- Practise it: open the interactive Make Money lessons in your learning journey.
- Next lesson: Taxes Made Simple: where your money goes.
- Previous lesson: Banks and Accounts: how banks work.
- Related: Needs vs. Wants: smarter spending choices.
This article is educational and is not financial advice. Amara is a fictional character from the Mondosol cast.
