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28 Cards in this Set
- Front
- Back
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Price
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the assignment of value, or the amount the consumer must exchange to received the offering
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Prestige Products
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products that have a high price and that appeal to status-conscious consumers
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Price Elasticity of Demand
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the percentage change in unit sales that results from a percentage change in price
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Elastic Demand
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demand in which changes in price have large effects on the amount demanded
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Inelastic Demand
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demand in which changes in price have little or no effect on the amount demanded
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Cross-Elasticity of Demand
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when changes in the price of one product affect the demand for another item
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Variable Costs
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the costs of production (raw and processed materials, parts, and labor) that are tied to and vary depending on the number of units produced
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Fixed Costs
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costs of production that do not change with the number or units produced
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Average Fixed Cost
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The fixed cost per unit produced
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Total Costs
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the total of the fixed costs and the variable costs for the set number of units produced
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Break-Even Analysis
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a method for determining the number of units that a firm must produce and sell at a given price to cover all its costs
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Break-Even Point
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the point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the firm will suffer a loss
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Contribution Per Unit
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the difference between the price the firm charges for a product and the variable costs
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Marginal Analysis
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a method that uses cost and demand to identify the price that will maximize profits
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Marginal Cost
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the increase in total cost that results from producing one additional unit of a product
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Marginal Revenue
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the increase in total income or revenue that results from selling one additional unit of a product
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Cost-Plus Pricing
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a method of setting prices in which the seller totals all the costs for the product and then adds an amount to arrive at the selling price
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Demand-Based Pricing
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a price-setting method based on estimates of demand at different prices
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Target Costing
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a process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price
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Yield Management Pricing
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a practice of charging different prices to different customers in order to manage capacity while maximizing revenues
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Price Leadership
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a pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or very similar prices
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Value Pricing/Everyday Low Pricing (EDLP)
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a pricing strategy in which a firm sets prices that provide ultimate value to customers
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Skimming Price
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a very high, premium price that a firm charges for its new, highly desirable product
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Penetration Pricing
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a pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it
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Trial Pricing
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pricing a new product low for a limited period of time in order to lower the risk for a customer
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Price Bundling
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selling two or more goods or services as a single package for one price
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Captive Pricing
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a pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item
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F.O.B. Origin Pricing
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a pricing tactic in which the cost of transporting the product form the factory to the customer's location is the responsibility of the customer
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