Pricing Stratigies Flashcards
Manufacturer selling prices is equal to….
Price to distributions
Retailer selling price is equal to…
Price to consumers
Skimming
Setting the price high and then continuing to lower it
Penetration Pricing
Offering product at lower price in hopes of getting into market
Odd even pricing
Price at odd number so consumers think it’s lower
Example: $19.99
Competition Based Pricing
Setting price based on competitor
Demand oriented pricing
Setting pricing based on demand
Fixed cost
Cost that don’t change
Variable cost
Cost that changes
Profit =
Total Revenue - Total Cost
Total Revenue =
Unit Price x Quanity
Total Costs =
fixed costs + variable cost
Break Even Analysis
A method to find amount of sales to cover all costs
Retail Price
Price the store sells at
Manufacturer
Company that produces the product
Wholesale Price
Price the manufacturer sells at
Price elasticity
Sensitivity based on price change
Elastic
Very sensitive to change
Inelastic
Not sensitive to change
Break Even Point =
Selling Price- variable costs per unit
