Pricing Strategies Flashcards

Flashcards covering various pricing strategies discussed in the lecture notes.

Penetration Pricing

Pricing a product at a low level to encourage large quantities purchase; used to gain market share.

Price Takers

Businesses that must accept the price set by the market, common in perfect competition.

Price Makers

Businesses that can use pricing strategies because they are not bound by a set market price.

Market-Orientated Strategies

Market-oriented businesses set a price at the level the market is willing to accept.

Cost-Based Strategies

Businesses concentrate on internal costs when pricing products are known as product-orientated businesses; strategies are based around production costs.

Price Skimming

Charging a high price for a product with a unique selling point (USP) for a limited period.

Destroyer/Predatory Pricing

Setting a price low enough to drive competitors out of the market; often seen as anti-competitive and illegal.

Going Rate Pricing

Accepting the current market pricing structure; selling goods or services at a price in line with competitors.

Loss Leader Pricing

Selling products at a loss to generate further sales elsewhere in the business.

Psychological Pricing

Setting prices at the level that matches what consumers expect to pay, creating a perception of value.

Contribution Pricing

Price will be based on the variable costs plus a contribution towards overheads and profits.

Cost Plus Pricing

Adding a profit percentage to the average cost of producing the good; known as adding a mark-up.