Firms in the euro area mostly set prices based on markup rules and often use price discrimination. They adjust prices infrequently, about one to three times a year, and even less frequently actually change prices. Price stickiness is due to customer relationships and coordination issues. Firms consider both past and expected economic conditions when setting prices. Cost shocks have a bigger impact on price increases than decreases, while a drop in demand is more likely to lead to a price change than an increase in demand.