Marketing Final Chapter 18

markup

dollar amount added to the cost of products to get the selling price

markup chain

the sequence of markups firms use at different levels in a channel, determines the price structure in the whole channel

average cost pricing

adding a reasonable markup to the average cost of a product

total fixed costs

the sum of those costs that are fixed in total, no matter how much is produced

total variable cost

the sum of those changing expenses that are closely related to output

total cost

the sum of total fixed and total variable costs

average cost per unit

obtained by dividng total cost by the related quantity

average fixed cost

obtained by dividing total fixed cost by the related quantity

average variable cost

obtained by dividing total variable cost by the related quantity

break even analysis

evaluates whether the firm will be able to break even

break even point

the quantity where the firm’s total cost will just equal its total revenue

fixed cost contribution per unit

assumed selling price per unit minus the variable cost per unit

marginal analysis

focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity

price sensitivity

refers to the degree to which customers purchase decisions are affected by the price

value in use pricing

setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used

reference price

the price consumers expect to pay for many of the products they purchase

leader pricing

setting some very low prices to get customers into retail stores

bait pricing

setting very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store

freemium

strategy used where you provide a product for no charge, while money is charged for additional features that enhance the product’s use

psychological pricing

setting prices that have special appeal to target customers

odd even pricing

setting prices that end in certain numbers

subscription pricing

customers pay on a periodic basis for access to a product

price lining

setting a few price levels for a product line and then marking all times at these prices

demand backward pricing

setting an acceptable final consumer price and working backward to what a producer can charge

prestige pricing

setting a rather high price to suggest high quality or high status

full line pricing

setting prices for a whole line of products

complementary product pricing

setting prices on several products as a group

product bundle pricing

setting one price for a set of products