Chapter 10: Pricing - Understanding and Capturing Customer Value

Question 1

What is price?

Answer 1

The amount charged for a product or service. More specifically it is the total amount of cost incurred to the customer and the total sum of all the values that a customer gives up to gain the benefits of using a product or service

Question 2

Identify the three major pricing strategies

Answer 2

Customer Value Pricing
Cost Based Pricing
Competition Based Pricing

Question 3

What is Customer Value Pricing?

Answer 3

Customer value pricing - Setting the cost at the buyers perceived value rather than the seller’s cost

Ultimately, the customer decides on the appropriate price for a product.

Question 4

Identify the internal and external factors that influence a firms pricing strategy

Question 5

Define cost-based pricing

Answer 5

This is a product-based pricing model based on the cost to produce the product. The organisation then proceeds to sell at the appropriate designated price point.

Question 6

Define value-based pricing

Answer 6

This is a customer centred pricing approach based on the assessment of a customer’s needs and the customers perceived value of the product.

Question 7

How do you calculate the breakeven point?

Question 8

What is the relationship between the fixed cost the variable cost and the total cost?

Question 9

Define the demand curve

Question 10

What is the experience curve?