Definition of fixed price

1. price that serves as a standard for the valuation of certain inventory accounts (i.e., raw materials, work-in-process, and finished goods) in standard costing.
2. price that must be charged under a contract regardless of production costs.
3. economic concept utilized by governmental units establishing a fixed price for a price floor (below which the price is not legally allowed to fall) and price ceilings (above which the price is not legally allowed to rise) on certain regulated goods and services.
4. price at which investment banker agree to sell the issue to the investing public in a public offering of new security issues.

Contracts: type of contract where the price is preset and invariable, regardless of the actual costs of production. See also cost-plus contract.
Investment: in a public offering of new securities, price at which investment bankers in the underwriting syndicate agree to sell the issue to the public. The price remains fixed as long as the syndicate remains in effect. The proper term for this kind of system is fixed price offering system. In contrast, Eurobonds, which are also sold through underwriting syndicates, are offered on a basis that permits discrimination among customers; i.e., the underwriting spread may be adjusted to suit the particular buyer.See also eurobond.