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Price

The amount of money charged for a product or service, which can be narrowly defined as the money exchanged or broadly defined as the sum of values consumers give up to gain benefits.

Revenue

The total income generated from sales, calculated as the price of a product multiplied by the quantity sold.

Price Elasticity

A measure of how sensitive consumers are to changes in the price of a product, calculated as the percentage change in quantity demanded divided by the percentage change in price.

Product Costs

The expenses incurred in producing or acquiring a product, including fixed costs that remain constant and variable costs that change with production levels.

Break-even Analysis

An evaluation method to determine the level of sales needed for a firm to cover all costs, with profit made above the break-even point and losses incurred below it.

Variable Cost Pricing

A pricing strategy where only variable costs are considered in short-run pricing decisions, ensuring prices exceed variable costs to continue production.

Macro Environmental Factors

External influences like political, economic, social, technological, environmental, and legal factors that impact pricing decisions.

Legal Considerations

Regulations under acts like the Sherman Act, Clayton Act, and Robinson-Patman Act that prohibit unfair pricing practices such as price fixing and deceptive pricing.

Psychological Pricing

Strategies like odd/even pricing that influence consumer perceptions and behaviors based on price points.

Skimming Pricing

Setting a high initial price and gradually lowering it, often used for new products to capitalize on early demand, while Penetration Pricing involves setting a low price initially to gain market share.