Pricing Strategies & Concepts

These flashcards cover key vocabulary and concepts related to pricing strategies and objectives.

Target Return Objective

Sets a profit at a specific level, often a percentage of sales or capital investment.

Profit Maximization Objective

Aims to make as much profit as possible, not necessarily by charging high prices.

Market-share Objective

A strategy to obtain a specified percentage share of a market.

One-price Policy

Offers the same price to all customers purchasing under the same conditions and quantities.

Flexible-price Policy

Offers the same product at different prices to different customers.

Skimming Price Policy

Sells high-priced products to the top of the market before targeting price-sensitive customers.

Penetration Price Policy

Sells at a low price to the entire market to gain volume.

Introductory Price Dealing

Cuts price temporarily to introduce new products to the market.

List Price

The basic published price, often subject to discounts.

Discount Policies

Price reductions made from the list price.

Quantity Discounts

Price reductions offered to encourage bulk purchases.

Seasonal Discounts

Encouragement for buyers to purchase earlier than current demand requires.

Cash Discounts

Reductions in price to encourage quicker payments.

Trade (functional) Discounts

Reductions in list price offered to channel members.

Sales Prices

Temporary discounts to encourage immediate purchases.

Target Return Pricing

Pricing strategy that aims for a targeted return.

Value-in-Use Pricing

Setting prices based on the savings customers achieve by using a product.

Bait Pricing

Setting low prices to attract customers, then upselling more expensive products.

Odd-even Pricing

Setting prices that end in certain numbers to appeal to consumers.

Demand-backward Pricing

Setting the consumer price first and working backward to ascertain producer prices.

Prestige Pricing

Different prices create different perceptions of value among consumers.

Break Even Points

Calculates the sales revenue point that equals production costs, beyond which profit is made.

Demand Elasticity

The degree to which demand is influenced by changes in price.

Elastic Demand

Demand that significantly changes with price fluctuations.

Inelastic Demand

Demand that remains largely unaffected by price changes.