08.5 price and pricing methods Flashcards
1
Q
Pricing Methods
A
- Cost Based Pricing
- Market Based Pricing
- Competition Based Pricing
2
Q
Pricing Methods: COST BASED PRICING
A
- Cost of producing or purchasing one unit of product and then adding a mark-up (% of profit margin)
- Cost + Cost × Mark-up percentage = Price
3
Q
Pricing Methods: MARKET BASED PRICING
A
- Setting prices according to the interaction between the levels of supply and demand
- Higher the supply, lower the price
- Lower the supply, higher the price
4
Q
Pricing Methods: COMPETITION BASED PRICING
A
- Price is set by competitors
- Trying to achieve price leader
5
Q
Pricing Strategies
A
- Price Skimming
- Price Penetration
- Loss Leader
- Price Points
6
Q
Pricing Strategies: PRICE SKIMMING
A
- Selling products at highest price then decrease price over time
- Gather as much revenue while consumer demand is high
7
Q
Pricing Strategies: PRICE PENETRATION
A
- Selling products at the lowest price then increase over time
- Gather as much market share while consumer demand is high
8
Q
Pricing Strategies: LOSS LEADER
A
- Selling product below cost price to attract customers to store
9
Q
Pricing Strategies: PRICE POINTS
A
- Selling products at a predetermined price
10
Q
Price and Quality Interaction
A
- High price = Good quality
- Low price = Low quality
