Pricing strategies + HL content

price

amount of money a customer pays for a product or service. It covers the cost of making the product and includes the profit for the business

cost plus (mark up) pricing

sets price by adding profit margin on top of the production cost

penetration pricing

setting low price to enter a market or industry

loss leader pricing

pricing a product below its cost of production to attract customers to buy other expensive products

predatory pricing

setting very low prices sometimes even below cost to hurt competitors and stop new businesses from entering the market

premium pricing

setting very high prices for products because of brand image, reputation or exclusivity

dynamic pricing

when a business charges different prices based on demand

competitive pricing

business sets its prices based on the prices of their competitors. They can choose to set it lower, equal or higher

contribution per unit

shows how much each product contributes to covering fixed costs

contribution pricing

sets price above the variable cost so each item contributes to paying off fixed costs

price elasticity of demand

measures how the demand changes when the price is changed

PED 0-1

inelastic. even if there is a large change in price, it doesnt impact demand significantly

PED 1

unit elastic. change in price is equal to the change in demand

PED 1+

elastic. significant change in price results in a significant change in demand