Pricing Strategies and Concepts

These flashcards cover important pricing strategies and concepts discussed in the lecture, focusing on definitions and examples of each term.

Price Discrimination

The practice of charging different prices to consumers who differ in price sensitivity, to capture more surplus.

Producer Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Variable Cost

The costs that vary with the level of output or production.

Market Skimming Pricing

Setting a high price for a new product to maximize revenues from segments willing to pay more.

Premium Pricing

Offering high-end items for price-insensitive customers.

Competitive Pricing

Pricing strategy driven by competitors, often intended to capture market share rather than surplus.

Penetration Pricing

Setting a low price to enter a market and attract customers away from competitors.

Captive Product Pricing

Low-balling the price of one item that is used in conjunction with another, such as video game consoles and video games.

Price Bundling

The sale of two or more separate products in one package at a discount.

Product Line Pricing

Pricing all products within a product line relative to one another based on their quality.