Ch.18 Flashcards
Markup chain
The sequence of markups firms use at different levels in a channel
Total fixed cost
The sum of those costs that are fixed and 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 dividing the total cost by the related quantity
Average cost per unit
Obtained by dividing the 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 point
The quantity where the firms cost will just equal its total revenue
Break Even analysis
Evaluates whether the firm will be able to break even
Fixed cost contribution per unit
Assumed selling price per unit minus the variable cost per unit
Marginal analysis
Foxes on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity
Price sensitivity
The degree to which customers purchase decisions are affected by the price
Value in use
Setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used
Reference pricing
The price they expect to pay
Leader pricing
Setting some very low prices to get customers into retail stores
Bait pricing
Setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store
Odd even pricing
Setting the prices that end in certain numbers
Price lining
Setting a few price levels for a product line and then marking all items at these prices
Prestige pricing
Setting a rather high-priced to suggest high quality or high status
Full line pricing
Setting prices for a whole line of products
Complimentary product pricing
Setting prices on several products as a group
Product bundle pricing
Setting one price for a set of products
