MM:price

Question 1

What is cost plus pricing?

Answer 1

Calculating total costs and applying a markup % on to reach a market price

Question 2

The process of selecting a price point to best take advantage of a market relative to competition?

Answer 2

Competition based or competitor pricing

Question 3

What is price skimming?

Answer 3

Setting a high price to maximise profits during initial stages of the product life cycle

Question 4

What is penetration pricing?

Answer 4

Business is new to market so sets a price lower than competition to gain customer base

Question 5

What is psychological pricing?

Answer 5

Using .99 etc for prices so people feel as if they are receiving a cheaper price

Question 6

Contribution pricing ?

Answer 6

involves setting a price based on VC of producing a product aiming to contribute to FC

Question 7

What is marginal pricing?

Answer 7

Basing price of the marginal cost ( the next product)
Assuming FC and VC are covered by current output