Of all the methods for effecting water conservation the use of pricing is perhaps the most controversial and the least understood. As one reads the voluminous amount literature on this topic it is easy to become bogged down in the statistics related to the determination of price elasticity coefficients and lose track of the simple fact that water (like most other commodities) obeys the laws of supply and demand. That is, water use will respond to price changes and the results are, in general, fairly predictable. It is the purpose of this paper to summarize the fundamental concepts associated with water demand management through pricing and illustrate the likely results of the implementation of such a demand management program.