Demand curve definition

A demand curve demonstrates, graphical and/or mathematical, the relationship between the demand for a product and its price in a competitive market.

The demand for a product (or service) generally is reduced as price increases while all other factors are held constant and is referred to as the "law of demand." At too low a price, even free, a product will tend to be seen as not being of value and may not achieve sales volume much less optimum gross profit return.

It's important for any business to think about the relationship between price and gross profit required from a product line. One way to test the price/demand dynamic is to test and measure.