Chapter 7: Part 2 (Pages 3-6)

Price

A significant element of the marketing mix. This is the company's complete source of earning. It does not only include the cost of production but the profit margin as well.

Maximization (Revenue Growth)

Startups use this when they make pricing produce the greatest revenue for the business.

Penetration (Market Share)

This is setting a low price in a competitive market to win dominant market share and raising it later. It is common for entrepreneurs to use this method at the start.

Skimming (Profit Maximization)

This is setting a high price and systematically broaden the product offering to address more of the customer base at lower prices as the market progresses.

Cost plus pricing method

A pricing strategy wherein a company adds all expenses which have been used in producing a product which include direct material cost, direct labor cost, and overhead costs then it adds some fraction of a desired profit margin on top and arrived at a price for a product and/or service.

Target-return pricing

a method wherein

A business prices its product and/or service based on a target rate of return on the investment or what the company anticipates from the investing in the business.

Value-based pricing

A method that uses the perception of the customers on the worth or value of a product and/or service for pricing.

Bootstrapping or self-funding

Starting a company with little or no capital, thus an entrepreneur relies on money excluding outside investments.

Crowdsourcing

Refers to getting work, information, or opinions from a big group of people who give their data via the Internet, social media, and smartphone apps.

Equity Financing

The process of generating capital through the sale of shares.

Stage 1: Pre-seed funding

Preliminary capital a business that comes from friends, family members or even credit cards. This could be as small as Php5,000 and as high as Php100,000.

Stage 2: Seed Funding

Known also as seed capital usually ranges from Php100,000 to Php500,000. This fund is frequently given by angel investors.

Series A

Refers to the first round of institutional funding for a venture. The average amount on this round could be php Php 2 million up to Php 5 million.

Series B

The average fund that could be raised is Php5 million to Php $10 million or even to the extent of Php20 million or even more.

Stage 4: Later Stage Investment (Series C, D, etc.)

Some big companies backed up their ventures with more than 10 rounds of financing. Usually in every round an entrepreneur may raise from Php5 million to Php20 million or even more.

Mezzanine Capital

A capital in the form of equity, debt, or a convertible note that is given to a company just before its Initial Public Offering (IPO). They type of capital is being provided by private equity companies.