Hi there,

It completely depends on the elasticity of demand (i.e. price sensitivity of the customer)!

However, in general, you increase prices when not that many people will stop buying (so, you increase total profits through higher margins) and you decrease prices when a lot of people will start to buy as a result (so, you increase total profits through volumes).

Only 1 direction can ever be truly beneficial, and it depends on both your company's product/position in the market and the market dynamics themselves.

Read up on OPEC and how they “play” the demand/supply curve :)

(edited)

Hello,

The effects of a price change on total revenue (and hence market share) depend on the price elasticity of the product, so I would suggest reading up on that. 

In short, if decreasing prices leads to many more people buying the product, your revenue is going to increase. This tends to happen for generic products that are more easily substitutable. However, for some products, decreasing the price won't lead to many more people buying it (or buying more of it). This could be due to brand loyalty, quality, etc. So essentially the effect depends on the type of the good. Read up on price elasticity, then think about what is likely to happen in the specific example you are thinking about.

The fact that you ask about market share makes another factor salient, and that is competitor behavior. If you lower your prices, what is your competition going to do about it? The risk of a price war, where companies lower their prices in response to each other, is one big downside to consider. If you lower your prices, but your competitor does the same, you might not change your market share at all, but will end up with lower revenues as a result.