Chapter 10 Flashcards
Price
This amount of money charged for product or service or sum of all values that customers exchange for the benefits of having or using the product or service.
Customer-value based pricing
Setting price based on buyers´ perception of value rather than on the seller´s cost.
Value-based pricing
Cost-based pricing
This is customer-driven, sets prices based on the costs for producing, distributing, and selling the product as well as a fair rate of return for effort and risk
Value-based pricing
Product-driven
Good-value pricing
Offering just the right combination of quality and good service at a fair price.
Value-added pricing
Attaches value-added features and services to differentiate the companies’ offers and so their higher prices
Fixed costs
Costs that do not vary with production or sales level.
Variable costs
Cost that vary directly with the level of production.
Total costs
The sum of the fixed and variable cost for any given level production.
Experience curve (Learning curve)
The drop in the average per-unit production cost that comes with accumulated production experience.
Cost-plus pricing (Makeup pricing)
Adding a standard makeup to the cost of the product.
Break-even pricing (Target return pricing)
Setting price to break even on the costs of making and marketing a product or setting price to make a target return.
Competition-based pricing
Setting prices based on competitors’ strategies, costs, prices, and market offerings
Target costing
Pricing that starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met.
Demand curve
A curve that shows the number of units the market will buy in a given time period at different pricing that might be charged.
