Marketing Chapter 18

Front 1

Types of Cost

Back 1

Fixed
Variable
Total
Average cost per unit=Total Cost/Production level.

Front 2

Markup-definition and types

Back 2

Dollar amount add to cost to give you selling price.
Percent of Selling Price-based off selling price.
Selling Price=Cost/(1-Markup %)

Front 3

Markup Chain

Back 3

From manufacturer to wholesaler to retailer.
(see notes for example)

Front 4

Stockturn Rate

Back 4

Inventory turnover. how many times a year do you sell your inventory.
Varies between industries.

Front 5

Average cost pricing

Back 5

Adds a reasonable markup to average cost-Markup on a section of Products.
Common among middlemen.

Front 6

Break Even

Back 6

B.E.=Total Fixed Costs / Contribution Margin.
Contribution Margin=(Selling Price-Variable Costs)

Front 7

Marginal Analysis

Back 7

Change from adding one more unit (or group of units):
Marginal Revenue
Marginal Costs
Marginal Profits

Front 8

Marginal Analysis-Profit Maximization

Back 8

Most Widely used Pricing objective. Price at the point where Marginal Cost = or is just less than Marginal Revenue.

Front 9

Value in use Pricing

Back 9

Setting prices that capture some of what customers will save by switching to your product.

Front 10

Price Leader

Back 10

Company that is basically setting the prices in an industry. Usually the company that has the lowest costs.