Chapter 10 Flashcards
The amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.
price
Setting price based on buyers’ perceptions of value rather than on the seller’s cost.
Customer value–based pricing
Offering just the right combination of quality and good service at a fair price.
good-value pricing
Attaching value-added features and services to differentiate a company’s offers and charging higher prices.
value-added pricing
Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk.
Cost-based pricing
Costs that do not vary with production or sales level.
Fixed costs (overhead)
Costs that vary directly with the level of production.
Variable costs
The sum of the fixed and variable costs for any given level of production.
total costs
The drop in the average per-unit production cost that comes with accumulated production experience.
Experience curve (learning curve)
Adding a standard markup to the cost of the product.
Cost-plus pricing (markup pricing)
Setting price to break even on the costs of making and marketing a product or setting price to make a target return.
Break-even pricing (target return pricing)
Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met.
target costing
A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged.
demand curve
A measure of the sensitivity of demand to changes in price.
Price elasticity
