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18 Cards in this Set
- Front
- Back
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Price
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value placed on a good or service
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Oldest form of pricing
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The barter system |
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Forms of Pricing |
fees, charges, tuition, interest, wages, bonuses
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ROi |
Profitability (return) of a product
Rate of Return = Profit / Investment Expressed as a % |
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ROI |
Your cost to make and market the watches = $7.50 / unit
You sell each watch to retailers for $9$9-$7.50 = $1.50 profit1.50 / 7.50 = .20 or 20% ROI |
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Rate of Return |
You are a shoe manufacturer that sells to retailers for $35 / unit.
Your cost to make and market the shoes = $18 / unit. What is the ROI?Answer: $35-$18 = $17; $17 / $18 = .94 or 94% |
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Break Even Point |
A cd that costs $12 to make and market and will be sold for $15 each.
The total quantity that will be sold is 200,000 How many cds must you sell to break-even?Answer:$12 * 200,000 = $2,400,000$2,400,000 / $15 = 160,000 |
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Factors affecting demand elasticty |
Brand loyalty (inelastic)Price relative to income (elastic)Availability of substitutes (elastic)Luxury (elastic) vs. Necessity (inelastic)Urgency of purchase (inelastic)Law of Diminishing Marginal Utility – consumers will only buy so much of a product even though prices are low
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Product/Price Lining |
set prices for products within lines of merchandise
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Optional Product |
set prices for accessories or options sold with the main product (ex: cars, computers); start with a base price
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Captive Product |
sets price for main product low, but sets a high price for the accessories (ex: printer and ink cartridges)
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By Product |
sell left over/residual materials for very low prices to companies who use them
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Bundle Pricing |
complementary products sold in a package at a single price (lower than if sold separately) Ex: software
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Loss Leader |
used to increase store traffic by selling popular items at below-cost prices
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Prestige Pricing |
sets higher than average prices to suggest status and high quality (ex: Rolls Royce, Rolex)
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Multiple-Unit Pricing |
3 for $1.00, suggests a bargain and helps to increase sales volume (ex: gum 5 packs for $1.00)
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Everyday Low Price |
consistently low prices with no intention of raising them or offering discounts; not deeply discounted
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Bait and Switch |
a firm advertises a low price for an item it has no intention of selling (illegal)
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