Chapter 10 Vocab Flashcards
price
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
customer value based pricing
setting price based on buyers’ perceptions of value rather than on the seller’s cost
good value pricing
offering just the right combination of quality and good service at a fair price
EDLP everyday low pricing
charging a constant, everyday low price with few or no temporary price discounts
high-low pricing
charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items
value added pricing
attaching value added features and services to differentiate a company’s offers and charging higher prices
cost based pricing
setting prices based on the costs of producing, distributing and selling the product plus a fair return for the effort and risk
fixed costs (overhead)
costs that do not vary with production or sales level
variable costs
costs that vary directly with the level of production
total costs
the sum of the fixed and variable costs for any given level of production
experience (learning) curve
the drop in the average per unit production cost that comes with accumulated production experience
cost plus (markup) pricing
adding a standard markup to the cost of product
break even (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, prices, costs, and market offerings
target costing
pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
