The most common use of the word prego in Italian is what corresponds to "you are welcome" in English. It is the polite everyday reply to grazie, so it's what Italians might say when you thank them. Sometimes it is quite confusing though, because this word also turns up also in other situations where the translation makes no sense. For example, at a door, at a shopping counter, when someone hands you something or when a stranger lets you go first. Therefore, once you know that the word prego can also be used in these situations, everything starts to make more sense.
Prego gets translated differently depending on the context
The word prego is not a word with many different meanings, it is one word that English keeps translating in different ways. Prego is what you say when you offer something to someone or when you make room for them so they can sit on the train. What you offer can be a cup of coffee, a chair, holding the doorway for them, or even the chance to speak in front of other people. It is about making something available for the other person, putting it at their disposal and saying "here you go, now it's yours". English has no single word that covers all these situations, so it borrows whatever phrase fits the moment.
It is interesting to focus on the provenience of this word, which is also the reason why Italians say prego. It is the first person singular of the verb pregare (to pray, to beg), so it literally means "I pray you", similar to the old-fashioned English "pray, tell me". Over time the request softened into a courtesy.
Pregare goes back to Latin precāre (to pray, implore), related to prex, precis, meaning prayer; so the modern use of the word prego is actually the result of a long history of polite entreaty evolving into a conventional politeness expression.
Where you will hear the word prego
When you say thank you, you will hear it for sure. When you pay for your granita with brioche in Sicily, say grazie and the waiter will say prego right away. It is a word that works with a stranger, a shop assistant or with your best friend, as it is not only formal or informal; it is used in both registers.
Also at the counter, you will hear this word, when the person behind it looks at you and says "prego?" with a rising tone; here it means "How can help you? What can I get you?". I once went to one of my favourite "bar" in Catania, which is well known for its arancini with a beginner student I was having an in-person lesson with and he froze because he thought he had to respond "grazie".
"Prego" is also used by someone who is handing you something. For example, if you are sitting at a restaurant in Italy, the waiter might say "prego" while serving you or while pouring you some wine and asking you to try it.
In formal settings, like at the doctor's, you might hear the expression "prego, si accomodi", for example at the entrance, if the receptionist or doctor opens the door and steps aside or in the doctor's room, to invite you to sit down and get ready for the visit.
When someone lets you go first, for example when you are both in a narrow doorway or about to enter an elevator at the same moment, you might hear "prego" while the other person gestures towards the gap with an open hand. It basically means "after you".
Also, on the phone, some offices might answer the call with "prego?" meaning that they are ready to listen to you; at home, though, in Italy people usually answer the phone with "pronto".
Sometimes you can use "prego?" to kindly ask someone to repeat themselves.
Prego is not per favore
Italians use both a lot, but they are not used in the same way. The main difference is that per favore is used for asking and prego is used for offering.
Un caffè, per favore. (An espresso, please.)
Prego, ecco il caffè. (Here you are, here's your espresso.)
In the first sentence it is used to ask for the coffee. The second is the barista is giving it to you after your kind request. In Italy you might also hear the expression "per piacere" which has exactly the same meaning as per favore.
What to respond to prego
How you respond to prego in Italian depends on how it is used. Most of the time, you simply don't respond, as prego closes the exchange. For example if you have thanked someone and they respond prego the conversation is over. When prego is used as an offer, you answer with an action. For example you walk through the door first, you take the coffee they are handing to you, you tell the person at he counter what you would like to order or you pay for your order. In these cases, you can also add a grazie which is always appropriate.
A mistake that a student made during the lesson was responding grazie to my prego, thus reversing the exchange; it was a very small mistake, but she also only used it as a response to grazie, but we know now that it has many different uses. I correct you if we are together, as in this case, and online, of course. Here you can take a closer look at my lessons.
When you are the one being thanked, prego is not the only answer you can give. There are some other expressions which, to be honest, I like more, because they are more friendly and warm, for example "di niente", "figurati", "non dirlo nemmeno" and "non c'è di che". I would say that prego is more neutral.
Stop translating prego and it will stop being confusing
Prego is not a complicated word, it is a word English has no single equivalent for. Once you stop translating it and start recognising the offer, it will feel more natural, also to use it yourself. You don't need to find the English equivalent every time you hear it. Instead, pay attention to what is happening in the conversation, because, depending on the context, the meaning of this useful Italian expression will change.
If you would like to use prego in a natural way, the way native Italian speakers do, book a trial lesson with me! :)