Price and Profit (Conventional and Islamic Analytical Perspectives)

Abstract

The commodity price reflects its value or its exchange rate compared to other commodities. Based on the producers’ point of view, price is a commodity value which brings profit to the company. On the other hand, consumers see price as the value of commodities, both goods and services that can be useful for their daily needs. The role of the Government as a price maker is carried out through direct and indirect intervention. Although in Islam there are no provisions that regulate how much traders or producers may take profits, they are required to be reasonable in raising prices so as not to oppress consumers. Even if this happens, the government has a role on controlling the price through some policies. Producers and traders can get profit as long as their activities do not violate Islamic norms. The market mechanism, the balance of supply and demand forces, is the most important principle in the process of determining commodity prices in the concept of Islamic teachings. It happens when there is willingness among economic actors. Determination of profit and rational behavior for profit maximization in Islamic teachings is principally driven by three factors, namely assuming that business is fardhu kifayah, protection of consumer interests and profit sharing. Keywords: Price, Profit, Islamic Teachings, Conventional.