Pricing Flashcards
Cost based
Cost plus… add markup
Target return/be pricing
Based on production, manufacturing, distribution costs
Market based
Use data from the market demand/supply and what other competitors are doing
Peak load pricing
Different prices at different time
Attempt to ease off pressure when its super busy
eg
metlink peak times charge more before when people go/get home form school or work
Off peak pricing. Cheaper when less people use it
Eg
cheaper power at 12-6am when most people are sleeping
Price skimming
High price when new item introduced
Segment market based on income
Eg
Phones
Penetration pricing
Start with low price to gain market share then raise later
Eg
New products
Price gouging
High price to take advantage of certain conditions. Unethical
Eg
Low water availability = high price for water
Transfer prices
Price used when two divisions of a company / subsidiary trade with eachother
Price impacts profits recorded to each division and can avoiding paying tax
Price discrimination
Offering different people different prices for the same item
Eg
Supermarket in low income area lower price than high income area
Predatory pricing
Company sets price below market price to drive away competitors
Collusive pricing
2 or more companies in a market agree to set price above competitive/equilibrium price. Drives price up. Unethical
Price dumping
International price discrimination when price of product sold in import country is less than its value in the export country
Eg
Toys made in china are sold in export countries below market prices
