chap 11 Flashcards
what is price
that which is given up in an exchange to acquire a good or service
what is revenue
the price per unit charged to customers multiplied by the number of units sold
what is profit
revenue minus expenses
what are the 4 steps in setting prices
-set pricing objectives (sales/profit/status quo)
-estimate demand, cost, profits
-choose a price strat (skimming/penetration or status quo)
-fine-tune with tactics
describe the 5 common pricing strats
-price skimming: high introductory $ with heavy promotion
-penetration pricing: low price to reach mass market
-status quo pricing: identical or very close compet price
-cost-plus pricing: cost+ markup considering market condition and brand equity
-value-based pricing: based on perceived value, logical and objective approach
demand elasticity
non essential, many alternatives (car , fasion, restaurant
demand inelasticity
essential, few alternatives (basic food item, electricity)
what is markup
the profit-producing device of price and thus must be a component of each pricing tactic.
๐๐๐ซ๐ค๐ฎ๐ฉ ๐ข๐ง $=๐๐๐ฅ๐ฅ๐ข๐ง๐ ๐๐ซ๐ข๐๐โ๐๐จ๐ฌ๐ญ
To calculate price, using markup on cost:
๐๐ซ๐ข๐๐=๐๐จ๐ฌ๐ญ(๐+ ๐๐๐ซ๐ค๐ฎ๐ฉ ๐จ๐ง ๐๐จ๐ฌ๐ญ %)
on cost percentage
๐๐๐ซ๐ค๐ฎ๐ฉ ๐จ๐ง ๐๐จ๐ฌ๐ญ (๐ข๐ง %)=(๐๐๐ซ๐ค๐ฎ๐ฉ $)/๐๐จ๐ฌ๐ญ ๐ฑ ๐๐๐
what is quantity discount
a unit price reduction offered to buyers buying either in multiple units or at more than a specified dollar amount
cash discount
a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill
what is personal services pricing
used by people with experience, training, and often certification by a licensing board; fees are typically charged at an hourly rate but may be based on the solution of a problem or performance of an act
what is loss leader pricing
a product is sold near or even below co t in the hope that shoppers will buy other items once they are in the store
what is price bundling
marketing two or more products in a single package for a special price ex: bell
what is bait pricing
advertising an item at an unrealistically low price as โbaitโ to lure customers to a store or selling place
what is value-based pricing
companies base their pricing on how much the customer believes a product is worth
what is seasonal discount
a price reduction for buying merchandise out of season quickly, often in real time
price strategy vs price tactic
- defines the initial price for a product as a means of achieving the set pricing objective
- various strategies and approaches used by businesses to determine and adjust pricing for their products and services in the online marketplace.
what is breakeven strategy
the calculation of number of units sold, or total revenue required, that a company must meet to cover its costs, beyond which profit occurs
what are the legal or ethical issues
baith pricing, deceptive pricing, price fixing, predatory pricing, resale price maintenance, price discrimination
