Chapter 21 Flashcards
Pricing Objectives
Goals that describe what a firm wants to achieve through pricing.
Cost-Based Pricing
Adding a dollar amount or percentage to the cost of the product.
Cost-Plus Pricing
Adding a specified dollar amount or percentage to the seller’s cost.
Markup Pricing
Adding to the cost of the product a predetermined percentage of that cost.
Demand-Based Pricing
Pricing based on the level of demand for the product.
Competition-Based Pricing
Pricing influenced primarily by competitor’s prices.
Differential Pricing
Charging different prices to different buyers for the same quality and quantity of product.
Negotiated Pricing
Establishing a final price through bargaining between seller and customer.
Secondary-Market Pricing
Setting one price for the primary target market and a different price for another market.
Periodic Discounting
Temporary reduction of prices on a patterned or systematic basis.
Random Discounting
Temporarily reduction of prices on an unsystematic basis.
Price Skimming
Charging the highest possible price that buyers who most desire the product will pay.
Penetration Pricing
Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly.
Product-Line Pricing
Establishing and adjusting prices of multiple products within a product line.
Captive Pricing
Pricing the basic product in a product line low, while pricing related items higher.
Premium Pricing
Pricing the highest-quality or most versatile products higher than other models in the product line.
Bait Pricing
Pricing an item in a product line low with the intention of selling a higher-priced item in the line.
Price Lining
Setting a limited number of prices for selected groups or lines of merchandise.
Psychological Pricing
Pricing that attempts to influence a customer’s perception of price to make a product’s price more attractive.
Reference Pricing
Pricing a product at a moderate level and displaying it next to a more expensive model or brand.
Bundle Pricing
Packaging together two or more complementary products and selling them at a single price.
Multiple-Unit Pricing
Packaging together two or more identical products and selling them at a single price.
Everyday Low Prices (EDLP)
Pricing products low on a consistent basis.
Odd-Even Pricing
Ending the price with certain numbers to influence buyers’ perceptions of the price or product.
Customary Pricing
Pricing on the basis of tradition.
Prestige Pricing
Setting prices at an artificially high level to convey prestige or a quality image.
Professional Pricing
Fees set by people with great skill or experience in a particular field.
Price Leaders
A product priced below the usual markup, near cost, or below cost.
Special-Event Pricing
Advertised sales or price cutting linked to a holiday, a season, or an event.
Comparison Discounting
Setting a price at a specific level and comparing it with a higher price.
