Slide 6 Flashcards
Price
Money charged for a product/service, sum of values exchanged by customers for benefits.
Value-Based Pricing
Customer-driven, based on buyer’s perception of value.
Cost-Based Pricing
Product-driven, based on production, distribution, and selling costs plus return.
Competition-Based Pricing
Set prices based on competitor strategies, costs, and market offerings.
Good-Value Pricing
:Right combo of quality and service at a fair price.
Everyday Low Pricing (EDLP)
Constant low price, few discounts.
Cost Types
Fixed Costs: Do not vary with production/sales (e.g., rent, salaries).
Variable Costs: Vary with production level (e.g., raw materials, labor).
Market-Skimming Pricing
High initial prices to “skim” revenue layers.
Market-Penetration Pricing
: Low price to attract buyers and gain market share.
Price Elasticity
1. Inelastic Demand
2.Elastic Demand
Price Elasticity: Sensitivity of demand to price changes.
Inelastic Demand: Demand changes little with price change.
Elastic Demand: Demand changes greatly with price change.
High-Low Pricing
High prices with frequent promotions.
Value-Added Pricing
Extra features/services to justify higher prices.
