Book-Building vs Fixed-Price IPOs: What the Price Band Really Means
Why do some IPOs show a price band and others a single price? The two methods decide how your share price is set.
14 September 2026 · CoinWhisperer
Look at two IPOs side by side and you'll notice something: one shows a price band like ₹140–₹150, the other a single fixed price like ₹95. That difference comes from the two ways an IPO can be priced — and it changes how you apply.
Fixed-price IPOs
In a fixed-price issue, the company sets one price upfront and you apply at exactly that price. It's simple, but gives no room for the market to signal demand before listing. You also won't see category-wise demand build through the day the way you do in a book-built issue — subscription figures are typically published once a day.
Book-building IPOs
Most sizeable IPOs use book-building. Instead of a single price, the company gives a price band — a floor and a cap — and investors bid within it. The final price, called the cut-off price, is discovered from the bids: the exchange builds a “book” of demand at each price level, and the issue is usually priced at (or near) the cap when demand is strong.
- Price band: e.g. ₹140–₹150. You can bid at any price in the band, in the specified lot size.
- Cut-off option: retail investors can simply “bid at cut-off” — agreeing to accept whatever final price is discovered (more on this in our cut-off explainer).
- Live demand: subscription updates through the day, category by category, so you can watch appetite build before the window closes.
How the cut-off price is set
Once bidding closes, the merchant bankers and the company look at the demand book and pick the price at which the issue is comfortably covered. In a hot IPO that's almost always the cap price; in a lukewarm one it can be lower in the band. Everyone allotted — whatever price they bid — pays this single cut-off price, and any excess blocked amount is released.
What it means for you
- In a book-built IPO, unless you have a strong view, retail investors usually bid at cut-off so their bid isn't rejected for being below the final price.
- Always budget for the cap price — that's what you'll most likely pay if the issue is well subscribed.
- Watch the live subscription as the window progresses; it's real-time demand you don't get in a fixed-price issue.
Educational explainer, not investment advice. Verify the pricing method and band in each IPO's RHP.