Chapter 18 Flashcards
markup
a dollar amount added to the cost of products to get the selling price
markup (percent)
the % of selling price that is added to the cost to get the selling price
markup chain
the sequence of markups firms use at dif levels in a channel-determines the price structure in the whole channel
stock-turn 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 analysis
evaluate whether the firm will be able to break even-that is cover all its costs
break even point
the quantity where the firm’s total cost will just equal its total revenue
fixed cost contribution per unit
the assumed selling price per unit minus the variable cost per unit
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
means setting prices that will capture some of what customers will save by substituting the firm’s product for the one currently being used
reference price
the price they expect to pay-for many of the products they purchase
leader pricing
setting some very low prices-real bargains- to get customers into retail stores
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
odd even pricing
setting prices that end in certain numbers
