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27 Cards in this Set
- Front
- Back
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Price
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That which is given up in an exchange to acquire a good or service
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Revenue
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The price charged to customers multiplied by the number of units sold
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Profit
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Revenue minus expenses
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Return on investment (ROI)
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Net profit after taxes divided by total assets
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Market share
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A company's products sales as a percentage of total sales for that industry
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Status quo pricing
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A pricing objective that maintains existing prices or meets the competition's prices
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Demand
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The quantity of a product that will be sold in the market at various prices for a specified period
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Supply
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The quantity of a product that will be offered to the market by a supplier at various prices for a specified period
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Price equilibrium
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The price at which demand and supply are equal
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Elasticity of demand
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Consumers' responsiveness or sensitivity to changes in price
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Elastic demand
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A situation in which consumer demand is sensitive to changes in price
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Inelastic demand
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A situation in which an increase or a decrease in price will not significantly affect demand for the product
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Unitary elasticity
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A situation in which total revenue remains the same when prices change
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Yield management systems (YMS)
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A technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity by discounting early purchases, limiting early sales as these discounted prices, and overbooking capacity
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Variable cost
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A cost that varies with changes in the level of output
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Fixed cost
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A cost that does not change as output is increased or decreased
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Average variable cost (AVC)
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Total variable costs divided by quantity of output
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Average total cost (ATC)
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Total costs divided by quantity of output
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Marginal cost (MC)
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The change in total costs associated with a one-unit change in output
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Markup pricing
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The cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for
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Keystoning
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The practice of marking up prices by 100 percent, or doubling the cost
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Profit maximization
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A method of setting prices that occurs when marginal revenue equals marginal cost
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Marginal revenue (MR)
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The extra revenue associated with selling an extra unit of output or the change in total revenue with a one-unit change in output
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Break-even analysis
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A method of determining what sales volume must be reached before total revenue equals total costs
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Selling against the brand
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Stocking well-known branded items at high prices in order to sell store brands at discounted prices
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Extranet
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A private electronic network that links a company with its suppliers and customers
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Prestige pricing
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Charging a high price to help promote a high-quality image
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