Chapter 13 Flashcards
the amount of money exchanged for products and services
price
practice of exchanging products/services for other products/services
barter
price=list price - allowances + extra fees
price equation
ratio of perceived benefits to price
value
the practice of increasing product and service benefits while maintaining or decreasing price
value pricing
profit=total revenue - total cost
profit equation
six steps in setting price
pricing objectives
sales-expenses
profit
how much are you actually selling in the market
sales revenue
what percent of the market are you vs. your competition
market share
how many units are we selling
unit volume
many sellers who follow the market price for identical, commodity products
pure competition
many sellers who compete of nonprice factors
monopolistic competition
few sellers who are sensitive to each other’s prices
oligopoly
one seller who sets the price for a unique product
pure monolopy
a graph that related the quantity sold and price. showing the maximum number of units that will be sold at a given price
demand curve
factors that determine consumers’ willingness and ability to pay for products and services
demand factors
the percentage change in quantity demanded relative to a percentage change in price
price elasticity of demand
a slight decrease in price results in a relatively large increase in demand or unit
elastic demand
slight increase or decrease in price will not affect demand
inelastic demand
sales
total revenue
the expenses of the firm that are stable and do not change with the quantity of a produce
fixed cost
sum of the expenses of the firm that vary directly with the quantity of a product
variable cost
variable cost expressed on a per unit basis for a product
unit variable cost
the difference between unit selling price and unit variable cost
contribution margin
a technique that analyzes total revenue and total cost to determine profitability at various quantities
break-even analysis
shows the quantity sold needed to cover costs
break-even point
a graphic of the break even analysis
break-even chart