s4 week 2 Flashcards
Cost-Based pricing
It is one of the easiest pricing strategies in which the seller measures the production cost generated and applies a certain amount of the markup to the cost of sales. The markup is the amount of profit based on the overall expense, i.e. fixed and variable costs.
Mark up pricing
This pricing method allows the seller a fixed markup every time the product is sold.
Target-profit pricing
A pricing approach that allows the supplier of the product to recover a certain percentage of the investment annually.
Price
Is the amount of money charged and/or the sum of values that consumers exchange for the benefits of having or using the product or service.
Costumer value-based pricing
Uses the buyers’ perceptions of value, not the sellers’ cost as the key to pricing. Price is considered before the marketing program is set.
Good value pricing
Offers the right combination of quality and good service at a fair price. Existing brands are being redesigned to offer more quality for a given price or the same quality for a lower price.
Value-added pricing
Attaches value-added features and services to differentiate offers, support higher prices, and build pricing power.
Fixed cost
Costs that do not vary with production or sales level
Variable costs
The cost that varies with the level of production
Pricing power
The ability to escape price competition and justify higher prices and margins without losing market share.
Price ceiling
no demand above this price
Price floor
no profits below this price
cost-based pricing
types of cost
fixed costs
variable costs
total costs
total costs
are the sum of the fixed costs and variable costs for any given levels of production
