Ch 9 - Pricing Strategies and Market Dynamics

Price

The amount of money charged for a product or service

Customer-Value based Pricing

A pricing strategy that considers the perceived value a product or service provides to the customer

Cost Based Pricing

Pricing based on production, distribution, and selling costs, plus a return for effort and risk.

Good-Value Pricing

Offering the right combination of quality and good service at a fair price

Value Added Pricing

Charging higher prices with extra features or benefits.This strategy focuses on distinguishing products by enhancing their perceived value through additional services or features, justifying a higher price.

Cost-Plus Pricing

Adding a standard markup to cover costs and provide profit.

Breakeven Pricing

Pricing where total revenue equals total costs, covering costs to avoid losses.

Fixed Costs

Costs that do not vary with production or sales level

Variable Costs

Costs that vary based on level of production

Total Costs

The sum of fixed and variable costs for any given level of production.

Pure Competition

Many buyers and sellers trading uniform commodities such as wheat or copper

Monopolistic Competition

Many buyers or sellers trading over a range of prices rather than a single market price.

Oligopolistic Competition

Market consists of only a few large sellers.

Pure Monopoly

Market is dominated by one seller.

Market Skimming

Start with a high price, lower over time maximize early revenue.

Market Penetration

Setting a low price to attract a large number of buyers for a new product.

Product Line Pricing

Pricing strategy across an entire product line.

Optional Product Pricing

Charging a fee on optional accessories or features for a product.

Captive Product Pricing

Low prices on main products, high prices on required accessories.

By Product Pricing

Pricing by-products to reduce disposal costs and boost main product's competitiveness.

Product Bundle Pricing

Selling a combination of several products or bundle for a reduced price.

Discount and Allowance Pricing

Reducing prices to reward customer actions such as paying bills early, volume purchases and off-season buying.

Segmented Pricing

Adjusting prices based on differences in customers, products, times or locations.

Psychological Pricing

Adjusting prices for psychological effect.

Promotional Pricing

Reducing prices temporarily to spur consumer spending.

Geographical Pricing

Price differences for the same product based on buyer location.

Dynamic Pricing

Adjusting prices continuously to meet customer and situation needs.

International Pricing

Adjusting prices for international products.

Price Fixing

When competitors collude to set prices for products or services rather than allow market forces to set the price.

Predatory Pricing

Selling at lower prices with the intention of pushing competitors out of business.

Price Discrimination

Charging different prices to different customers.

Price Maintenance

A manufacturer or supplier setting a minimum price a reseller can sell its product.

Deceptive Pricing

Misleading pricing strategies meant to trick customers into thinking they are getting a 'good deal' when they are not.