Chapter 13 Flashcards
Define Price
amount of money exchanged for a product or service of value
4 Key Factors in determining demand
- Price
- Consumer Tastes
- Competition (price and availability)
- Consumer Income
Define Price Elasticity of Demand
how much demand changes when price is altered
Fixed Costs + Variable Costs =
Total Costs
Define the Break-Even Quantity
of units sold to make $0
What is the Break Even Point Equation
Fixed Costs / (Unit Price - Unit Variable Cost)
7 Pricing Strategies
Skimming Pricing Penetration Pricing Prestige Pricing Price Lining Odd-Even Pricing Bundle Pricing Yield Management Pricing
Define price lining
line of products at various price points
Odd-Even Pricing
few units below even number
Define Bundle Pricing
two or more products in single package price
Yield Management Pricing
different prices to different customers to maximize revenue
3 Cost Oriented Pricing Approaches
Standard Markup Pricing
Cost-Plus Pricing
Experience Curve Pricing
Define Standard Markup Pricing
add fixed percentage to all items in specific product class
Define Cost-Plus pricing
sum total unit cost of providing product or service then add a specific amount
Define Experience Curve Pricing
based on production experience - unit costs of many products and services decline by 10%-30% when production experience doubles
