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
