Chapter 6: The Pricing of Services Flashcards
The actual dollar price paid by the consumer for a product.
Monetary cost
The time the customer has to spend to acquire the service.
Time cost
The physical energy spent by the customer to acquire the service.
Energy cost
The mental energy spent by the customer to acquire the service.
Psychic energy
The worth assigned to the product by the customer.
Product value
The worth assigned to the service by the customer.
Service value
The worth assigned to the service-providing personnel by the customer.
Personnel value
The worth assigned to the image of the service or service provider by the customer.
Image value
Costs that are planned and accrued during the operating period regardless of the level of production and sales.
Fixed costs
Costs that are directly associated with increases in production and sales.
Variable costs
Based on the idea of the more you produce, the cheaper it is to produce it…. the cheaper it is to produce it, the cheaper it can be sold…. the cheaper it can be sold, the more is sold…. the more it is sold, the more it can be produced (and so on).
Economies of scale
The type of market demand when a change in the price of a service is greater than a change in quantity demanded.
Inelastic demand
A measure of the responsiveness of a demand for a service relative to a change in price for another service.
Cross-price elasticity
The effect of cross-price elasticity in which an increase in the price of product A decreases the demand for product B.
Complements
The effect of cross-price elasticity in which an increase in the price of product A increases the demand for product B.
Substitutes
The practice of charging different customers different prices for essentially the same service.
Price discrimination
Items that customers buy often, so they are very well aware of typical prices.
Signpost items
The price a consumer considers to capture the value he or she places on the benefits.
Reservation price
The practice of marketing two or more products and/or services in a single package at a single price.
Price bundling
When retailers purchase enough product on deal to carry over until the product is being sold on deal again.
Forward buying
The practice of pricing multiple versions of the same product or grouping similar products together.
Product-line pricing
Cost-driven price increases are perceived as fair, whereas demand-driven price increases are viewed as unfair.
Dual entitlement
Pricing strategies that are designed to reduce the amount of perceived risk associated with a purchase.
Satisfaction-based pricing
A pricing strategy that charges customers for services actually used as opposed to overall “membership” fees.
Benefit-driven pricing
A pricing strategy in which the customer pays a fixed price and the provider assumes the risk of price increases and cost overruns.
Flat-rate pricing
Pricing strategies that encourage customers to enhance and expand their dealings with the service provider.
Relationship pricing
Price-bundling technique that allows consumers to either buy Service A and Service B together or purchase one service separately.
Mixed bundling
Pricing strategies that appeal to economically minded consumers by delivering the best and most cost-effective service for the price.
Efficiency pricing
The practice of offering discounts without conceding margins on a permanent basis.
Adaptive pricing
