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10 Cards in this Set
- Front
- Back
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Amount of money charged for a product or service. Sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. Only element that produces revenue; all other elements represent costs
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Price
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Uses the buyer's perceptions of value, not the seller's cost, as the key to pricing. Customer driven.
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Value-based pricing
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Involves setting prices based on the costs of producing, distributing and selling the product plus a fair rate of return for its effort and risk. Product driven.
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Cost-based pricing
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Costs that do not vary with production or sales level. Ex. - Rent, heat, interest, executive salaries
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Fixed costs
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Costs that vary with the level of production. Ex. - Packaging, raw materials
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Variable costs
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Sum of the fixed and variable costs for any given level of production.
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Total costs
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Illustrates the response of demand to a change in price.
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Price elasticity of demand
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Occurs when demand hardly changes when there is a small change in price.
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Inelastic demand
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Occurs when demand changes greatly for a small change in price.
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Elastic demand
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Survival, profit maximization, market share leadership, customer retention and relationship building, attracting new customers, opposing competitive threats, increasing product excitement
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Pricing objectives
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