Pricing Strategies Flashcards
Market-skimming pricing (price skimming)
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
Market-penetration pricing
Setting a low price for a new product to attract a large number of buyers and a large market share.
Product line pricing
Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices.
Optional product pricing
The pricing of optional or accessory products along with a main product.
Captive product pricing
Setting a price for products that must be used along with a main product, such as blades for a razor and games for a videogame console.
By-product pricing
Setting a price for by-products to make the main product’s price more competitive.
Product bundle pricing
Combining several products and offering the bundle at a reduced price.
Discount
A straight reduction in price on purchases during a stated period of time or of larger quantities.
Allowance
Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way.
Segmented pricing
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs.
Psychological pricing
Pricing that considers the psychology of prices, not simply the economics; the price says something about the product.
Reference prices
Prices that buyers carry in their minds and refer to when they look at a given product.
Promotional pricing
Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales.
Geographical pricing
Setting prices for customers located in different parts of the country or world.
Market-skimming pricing (price skimming)
Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
FOB-origin pricing
A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination.
Uniform-delivered pricing
A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location.
Zone pricing
A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price; the more distant the zone, the higher the price.
Basing-point pricing
A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer.
Freight-absorption pricing
A geographical pricing strategy in which the seller absorbs all or part of the freight charges to get the desired business.
Dynamic pricing
Adjusting prices continually to meet the characteristics and needs of individual customers and situations.
