Chapter 18 Flashcards
What is Markup
A dollar amount added to the cost of products to get the selling price
Markup (percent)
The percentage of selling price that is added to the cost to get the selling price
What is the markup chain
The sequence of markups firms use at different levels in the channel
What is the stockturn rate
The number of times the average inventory is sold during a year
What is average cost pricing
Adding a reasonable markup to the average cost of a product
What is a break even analysis
An approach to determine whether the firm will be able to break even with a particular price
What is the break even point
The sales quantity where the firm’s total cost will just equal its total revenue
Fixed cost contribution per unit
The selling price per unit minus the variable cost per unit
What is the marginal analysis
Evaluating the change in total revenue and total cost from selling one more unit
Where will the highest profit be earned
At the price were marginal cost is just less than or equal to marginal revenue
Value in use pricing
Setting prices that will capture some of what consumers will save by substituting the firms product for the one currently being used
Reference price
The price a consumer expects to pay
Leader pricing
Setting some very low prices to get customers into retail stores
Bait pricing
Setting some very low prices to attract customers but trying to sell more expensive models are brands wants the customers in the store
Psychological pricing
Setting prices that have special appeal to target customers
Odd even pricing
Setting prices that end in certain numbers
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
What is prestige pricing
Setting a rather high price to suggest high-quality or high status
What is full line pricing
Setting prices for a whole line of products
What is complementary product pricing
Setting prices on several related products as a group
What is product bundle pricing
Setting one price for a set of products
What is bid pricing
Offering a specific Price for each possible job rather than setting a price that applies for all customers
What is a negotiated price
A price that is set based on bargaining between buyer and seller
