Price Flashcards
What is Break-Even Analysis?
How many units must be sold at a given price to cover costs.
What is the Break-Even Calculation/Point?
fixed costs / gross profit
What are 4 Price factors?
- Laws
- Product Positioning
- Consumer Demand
- Competition
What are 3 Pricing strategies?
- Market Skimming
- Penetration Pricing
- Competitive Pricing
What is Market skimming?
When a new product is introduced then a high price is set to capitalize on the new nature of the product before competitors arrive.
What is Penetration pricing?
When introducing a product, a company may set a
low price to attract customers into buying a
number of units before competition sets in.
What is Competitive pricing?
In this most popular strategy companies match or
follow the price of others.
What are 10 Pricing policies?
- Leader Pricing
- Price Lining
- Everyday Low Prices
- Super Sizing
- Negotiated Pricing
- Interest-Free Pricing
- Combo Pricing
- Psychological Pricing
- Return on Investment (ROI)
- Purchase Discounts
What is Leader pricing?
Companies set low prices on a few items to draw customers.
What is Price lining?
Identically priced items are grouped together in a store so that high markup items are grouped with lower ones.
What are Everyday low prices?
A company will guarantee that their price is the lowest, and hence don’t need to advertise.
What is Super sizing?
This allows companies to increase the profit on a sale significantly.
What is Interest-free pricing?
Customers are offered the chance to take the product for a year and pay no interest.
What is Combo pricing?
Consumers are offered a lower price in one item if they purchase another item.
What is Psychological pricing?
Prices are made more attractive to consumers
What is Return on investment?
The company looks to see whether selling at a lower price will generate money sooner that can be used for other business opportunities.
What are Purchase discounts?
Profits are often due to savings in distribution, packaging, etc.
