WEEK 2

Question 1

The amount of money charged for a product or service

Answer 1

PRICE

Question 1

PRODUCT COST ESTIMATION TYPES

Answer 1

UNIT VARIABLE, FIXED COST

Question 2

Cost to manufacture one unit of the product. Includes the cost of direct materials, direct labor and direct
overhead.

Answer 2

UNIT VARIABLE COST

Question 3

Unit share of operating and other
expense

Answer 3

FIXED COST

Question 4

Materials used in the manufacturing

Answer 4

DIRECT MATERIALS

Question 5

Includes the wages of all workers directly
responsible for productionm

Answer 5

DIRECT LABOR

Question 6

Amount spent in manufacturing

Answer 6

DIRECT OVERHEAD

Question 7

Lowest possible price the company can set its product

Answer 7

BREAK-EVEN POINT

Question 8

Setting price based on buyer’s
perception of value

Answer 8

CUSTOMER VALUE-BASED PRICING

Question 9

2 TYPES OF VALUE BASED PRICING

Answer 9

GOOD-VALUE PRICING, VALUE-ADDED PRICING

Question 10

Offers the rightcombination of quality and good service at fair price

Answer 10

GOOD-VALUE PRICING

Question 11

Attaching
value-added features and services to
differentiate a company’s offer and charging
higher prices.

Answer 11

VALUE-ADDED PRICING |

Question 12

Price based on the cost of production,
distribution and selling plus fair rate of
return for effort and risk

Answer 12

COST BASED PRICING

Question 13

2 TYPES OF COST

Answer 13

FIXED COST |

Question 14

Vary directly with the level of
production

Answer 14

VARIABLE COST |

Question 15

Do not vary with production or
sales level

Answer 15

FIXED COST |

Question 16

Vary directly with the level of
production

Answer 16

VARIABLE COST

Question 17

Sum of the fixed and variable costs for any
given level of production

Answer 17

TOTAL COST

Question 18

• Adding a standard mark-up to the
  cost of the product

Answer 18

COST-PLUS PRICING

Question 19

FORMULA FOR UNIT COST

Answer 19

Variable cost + fixed cost / unit sales

Question 20

FORMULA FOR MARK-UP PRICE

Answer 20

Unit cost / 1-desired return on sales

Question 21

FORMULA FOR BREAK EVEN
VOLUME

Answer 21

Fixed cost / price - variable cost

Question 22

Setting price to break even on the cost of
making and marketing a product to make a target return

Answer 22

BREAK-EVEN PRICING

Question 23

Prices based on competitors
strategies, prices, cost and offerings

Answer 23

COMPETITION - BASED PRICING

Question 24

Company’s overall marketing strategy,objectives
and marketing mix

Answer 24

INTERNAL FACTORS

Question 25

Theory that consumers will perceive products
with odd price endings

Answer 25

ODD PRICING

Question 26

Nature of the market and demand

Answer 26

EXTERNAL FACTORS

Question 27

Supermarkets make comparison to items to
make their products appear more affordable

Answer 27

LOSS LEADER PRICING

Question 28

Reducing the number of price points on
merchandise to as little as possible in extreme
cases, to only one price point

Answer 28

PRICE\ LINING

Question 29

Disregards the unit cost of a product or service.
Instead it capitalizes on the high value
perception or positive brand reputation of a
product or service.

Answer 29

PRESTIGE PRICING

Question 30

organization prices its product at a range below
its unit cost but higher than its unit variable
cost

Answer 30

MARGINAL PRICING

Question 31

pricing strategy where the firm prices its product
lower than unit variable cost, initially resulting in
short-term losses.

Answer 31

PREDATORY PRICING

Question 32

Company prices its product same or close to the
competitors

Answer 32

GOING RATE PRICING

Question 33

Temporary reduction in the selling price for
repeat purchase

Answer 33

PROMOTIONAL PRICING

Question 34

The product’s selling price is way above its unit
cost.

Answer 34

PRICE SKIMMING

Question 35

The new product is priced only marginally above
its unit cost.

Answer 35

PENETRATION PRICING