Islamic principles on pricing: Beyond cost and profit

A recent controversy surrounding a RM26 nasi ayam (chicken rice) meal, prepared by the mother of a celebrity, has sparked widespread debate. Public reactions are split between those who deem the price exorbitant for a common dish and others who argue that vendors have the right to set prices based on operational costs, location, quality, and the value offered.

From an Islamic economic perspective, the core principle of trade is mutual consent between buyer and seller, as stated in the Quran. Transactions are considered valid when the price is known, the item is understood, and the decision is made without coercion. Islam allows traders to determine prices according to market conditions, provided there is no deceit, manipulation, or exploitation.

The article cites the example of Urwah al-Bariqi, who was given a dinar by Prophet Muhammad to buy a sheep and successfully made a profit through his business acumen, receiving a prayer for prosperity. This illustrates that profit is permissible through wise trading and added value. However, this freedom of the market does not permit traders to take advantage of consumers. Practices such as fraud, hoarding, or setting excessively high prices that burden buyers are rejected.

It is acknowledged that product pricing involves more than just raw material costs. Factors like rent, employee wages, utilities, transportation, marketing, location, brand reputation, and customer experience all influence the final price. While high profits are not inherently wrong if earned honestly, profits derived from exploitation and oppression contradict Islamic principles of justice. Ultimately, consumers are free to choose based on their budget and perceived value, opting for alternatives if a product's price is deemed unreasonable.