EP Ch. 12: Pricing Strategies

price grouping

The practice of raising prices on goods or services to an unreasonable or unfair level.

Usually occurs when supply is short after a crisis event. It is illegal in most jurisdictions.

price fixing

Occurs when competitors agree to maintain prices at a certain level.

unti pricing

Indicating cost based on a standard unit of measurement such as pound, ounce or piece.

price skimming

A pricing strategy where a company sets a very high initial price and then lowers it over time. It is often coupled with heavy promotions.

penetration pricing

A pricing strategy where a company sets a very low initial price in order to attract customers and raise awareness.

psychology pricing

A marketing strategy based on the theory that prices will impact consumer perceptions.

odd/even pricing

A pricing strategy where retail prices are set as odd prices, a little less than an even price.

prestige pricing

A pricing strategy where prices are set high to give the perception of high quality.

promotional pricing

The act of lowering the prices temporarily to raise awareness.

discount pricing

A pricing strategy where products are artificially marked up higher but are then offered for sale for what seems to be a lower cost to the consumer.

MSRP (Manufactured Suggested Retail price)

A recommended price that retailers should charge set by manufacturers.

Markup

The amount added to the cost of manufactured good.

• Selling Price = Cost + Markup

Markdown

a reduction to a price of a good

break even point

the point at which revenue equals cost