Chapter 14: Price Flashcards
Skimming Pricing
Setting the highest initial price that customers who really desire the product are willing to pay when introducing a new or innovative product
Penetration Pricing
The opposite of Skimming Pricing
Setting a low initial price on a new product to appeal immediately to the mass market
Prestige Pricing
Setting a high price so that consumers that value quality or status will be attracted to the product
Price Lining
Setting the price of a line of products at a number of different specific pricing points
Odd-Even Pricing
Setting prices a few dollars or cent under an even number ($189.99)
Target Pricing
- Estimating the price that consumers would be willing to pay
- Working backward through markups taken by retailers and wholesalers
- Adjust composition and features of the product to achieve the target price to consumers
Bundle Pricing
Marketing of two or more products in a single package price
Yield Management Pricing
Changing of different prices to maximize revenue for a set amount of capacity at any given time
Standard Markup Pricing
Adding a fixed percentage to the cost of all items in a specific product class
Cost-plus Pricing
Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price
Target Profit Pricing
Setting an annual target of a specific dollar volume of profit
Customary Pricing
Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors
Above-,At, or Below-Market Pricing
Setting a price based on a subjective feel for the competitors’ price or market price as the benchmark
Loss-leader Pricing
Selling a product below its customary price to attract customers’ attention in hopes they will buy other products as well
Fixed-Price Policy
Also called One-Price Policy
Setting on price for all buyers of a product or service
Dynamic Pricing Policy
Also called a Flexible Price Policy
Setting different prices for products and services in real time in response to supply and demand conditions
Quantity Discounts
Reduction in unit costs for a large order (Cumulative and Noncumulative)
FOB Origin Pricing
Free on Board
Includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur
Uniform Delivered Pricing
Includes all transportation costs
Price Fixing
A conspiracy among firms to set prices for a product
Price Discrimination
Charging different prices to different buyers for products of like grade and quality
Deceptive Pricing
Bait-and-Switch
The practice of misleading consumers with price deals
Predatory Pricing
Charging a very low price for a product with the intent of driving competitors out of business
