Finalizing Price Flashcards
How companies can raise prices without alienating customers
Be honest about why
Keep promotions
Maintain quality
Timing - coincide with new product
Clickstreaming/Dynamic Pricing
Based o internet usage/custom pricing
Freemium
Most of the features are free but a premium upgrade is available
Surge Pricing
Based on demand
Demand oriented approaches
Skimming Penetration Prestige Price Lining Odd Even Target Bundle Yield Management
Price Skimming
Charge high price
Price Penetration
Charge low price
Prestige Pricing
Charge high price because its prestigious
Price Lining
Separate goods into bundles
Odd Even
Add the .99 on the end of the price
Target Pricing
Manufacturer adjusts composition and features to achieve target price
Bundle Pricing
Market two or more products in single package price
Yield Management
Charge different price to maximize revenue for set capacity
Ex: Airline seats
Cost Oriented Approaches
Standard Markup
Cost Plus
Experience Curve
Standard Markup
Add fixed amount of money onto base price of all items
Cost Plus
Price plus flat fee - can be flat percentage
Experience Curve
More production, less cost
Profit Oriented Approaches
Target profit
Target Return on Sales
Target Return on Investment
Competition Oriented Approaches
Customary
Above, At, or Below-Market
Loss Leader
Customary
Charge historic price
Above, At, or Below-Market
Set price above, at, or below market value
Loss Leader
Sell product below customary price for attention, not sales
Illegal Pricing Practices
Price Fixing
Price Discrimination
Deceptive Pricing
Predatory Pricing
