Pricing Strategies and Concepts

These flashcards cover key pricing strategies and concepts from the lecture notes, focusing on definitions and important elements of various pricing methodologies.

Cost-based pricing

Setting prices by estimating the average cost of producing and selling the product plus a profit margin.

Competitive-based pricing

Setting prices by selecting a competitor’s product price and pricing at the same level or slightly above or below.

Customer value-based pricing

Setting prices by estimating the willingness to pay of customers.

Profit margin

The percentage difference between the price and the unit cost.

Markup rate

The ratio of profit to the cost of the product expressed as a percentage.

Break-even point

The volume of sales at which total revenues equal total costs.

Elastic demand

Demand that is sensitive to price changes.

Inelastic demand

Demand that is not sensitive to price changes.