price Flashcards
Price Takers/ Makers
Have no option but to charge the ruling market price/ Able to fix their own price
Price Followers/ Leaders
Follow the price-changing lead of the market/ price changes are followed by rivals
Penetration
The objective is to gain market share. It involves pricing a product at a low level so that retailers and consumers are encouraged to purchase the product in large quantities.
Skimming
Charging a high price for a product that with a (USP) for a limited period. This involves
selling a product to the most profitable segment of the
market before it is sold to a wider market at a lower
price.
Cost-Plus
A profit percentage is added to the average cost of producing
the good. This is known as adding a mark-up.
Loss Leader
The selling of products at a loss, with the expectation that
this will generate further sales of some form elsewhere in the business. The additional sales that occur will hopefully recoup the
initial loss and subsequently make a profit for the business.
Psychological
Prices are set at the level that matches what consumers may expect to pay. Consumers perceive that they are receiving value from the price paid.
Contribution
Price will is based on the amount that each unit sold will contribute towards covering fixed costs and generating profit after variable costs
