Studied by 17 people
above-, at-, below-market pricing
the price customers are generally willing to pay not necessarily set by the company
break-even analysis
relationship between total revenue + cost to determine profitability at different output levels
bundle pricing
based on the idea that consumers value the package more than individual items
cost-plus
summing the total unit cost of providing a product/service + adding a specific amount to the cost to arrive at a price
customary pricing
standardized channel of distribution/other competitive factors dictate the price
demand curve
quantity sold and price graph showing how many units will be sold at a given price
dumping
when a firm sells a product in a foreign country below its domestic prices or below its actual cost
fixed cost
Costs that do not change with production or sales level
grey market
situations where products are sold through unauthorized channels of distribution.
loss leader
a product sold at a loss to attract customers
markup
difference between selling price and cost, usually expressed as a percentage of cost
odd-even pricing
setting prices a few dollars/cents under an even number
penetration pricing
setting a lower, affordable initial price on a new product to appeal to the mass market
prestige pricing
setting a high price so that status-conscious consumers are attracted to the product
pricing constraints
Factors that limit the range of price a firm may set
pricing objectives
Specified expectations of the price role in an organization’s marketing and strategic plans
profit equation
profit = total revenue – total cost.
skimming
setting the highest initial price that desired customers are willing to pay
standard markup
difference between selling price + cost divided by cost
target pricing
manufacturer adjusts the composition + features of a product to achieve the target price to consumers
target profit pricing
firm sets annual target of a specific dollar amount of profit
target ROI pricing
set prices to achieve a percentage mandated by board of directors/regulators
total cost
total expenses incurred by a firm in producing + marketing a product; total cost is the sum of fixed cost and variable costs
total revenue
total money received from the sale of a product
variable cost
Costs that vary directly with levels of production
value
ratio of perceived benefits to price
yield management pricing
charging of different prices to maximize revenue for a set amount of capacity at any given time
Note
Flashcard