Chapter 17 Flashcards
Markup:
dollar amount added to the cost of products to get the selling price.
Markup (Percent):
Percentage of selling price that is added to the cost to get the selling price.
Markup Chain:
The sequence of markups firm use at different levels in a channel. Determines the price structure in the whole channel.
Stockturn Rate:
The number of times the average inventory is sold in a year.
Average-Cost Pricing:
Adding a reasonable markup to the average cost of a product.
Break-Even Point (BEP):
The quantity where the firm’s total cost will just equal its total revenue.
Marginal Analysis:
Focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity.
Value In Use Pricing:
Setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used.
Leader Pricing:
Setting some very low prices (real bargains) to get customers into retail stores. The idea is not only to sell large quantities of the leader items, but also to get customers into the store to buy other products.
Bait Pricing:
Setting some very low prices to attract customers, but trying to sell more expensive models or brands once the customer is in the store.
Psychological Pricing:
Setting prices that have special appeal to target customers.
Price Lining:
Setting a few price levels for a product line and then marking all items at these prices.
Demand-Backward Pricing:
Setting an acceptable final consumer price and working backward to what a producer can charge.
Prestige Pricing:
Setting a rather high price to suggest high quality or high status.
Full-Line Pricing:
Setting prices for a whole line of products.
