Price Flashcards
(25 cards)
Is the amount of money charged for a good or service that a customer is willing to pay to get the product or service.
Price
The only revenue-generating element in the marketing mix.
Price
Product Cost Estimation
unit variable cost, fixed cost
It refers to how much it would cost to manufacture one unit of the product. This includes the cost of direct materials, direct labor, and direct overhead.
unit variable cost
Under Unit Variable Cost
direct material cost, direct labor cost, direct overhead cost
Are the costs of raw materials or components of a finished product.
direct material cost
Are the wages, benefits, insurance that are paid to workers directly involved in manufacturing and producing the goods
direct labor cost
Are manufacturing or factory-related costs incurred in producing a product. Ex. energy, water, and other utility costs for every blouse produced. It is computed by:
direct overhead cost
Are expenses associated with your business production that do not change over a short period of time, even if there are changes in the company sales volume or other activity levels.
fixed costs
Pricing Strategies
mark-up pricing, target return pricing, odd pricing or psychological pricing, loss leader pricing, price lining, prestige pricing, marginal pricing, predatory pricing, going rate pricing, promotional pricing
When new products are introduced into the market, one of the two pricing strategies can be used:
price skimming, penetration pricing
Is the pricing strategy of adding a certain value or percentage to the total cost of a good or service to determine its selling price, resulting in a profit for the company
mark-up pricing
The manufacturer determines the price based on a target rate of return on the investment.
target return pricing
It takes into account the time value of money as well as the profit that an investor expects from his investment.
target return pricing
It is setting prices lower than a whole number. It creates a subconscious impact on consumers that the price is lower than the product tagged to encourage spending more than intended
odd pricing or psychological pricing
It is an aggressive pricing strategy of selecting one or more products to sell below its production cost – or at a loss, to entice buyers to step foot in the store and stimulate sales of other expensive and profitable goods to make up for the loss.
loss leader pricing
It is a pricing strategy used by retailers to simplify a consumer’s buying decision by grouping common items at set price points
price lining
It is a niche selling strategy that involves setting prices at a high level, with no discounting to convey the high quality and positive brand reputation of a product or service
prestige pricing
It is where a business organization prices its product at a range below its unit cost but higher than its unit variable cost
marginal pricing
It is a pricing strategy of offering a price lower than the unit variable cost, initially resulting in short-term losses. The objective is to drive out a new or persistent competitor out of the market and create a monopoly
predatory pricing
It is a pricing strategy of examining the prices of their competitors and adopting the product price as per the rates prevailing in the market especially on par with the competitors
going rate pricing
It is a pricing strategy involving a temporary reduction in the selling price of a product/service to induce trial or to encourage repeat purchase
promotional pricing
Is a pricing strategy of charging the customer a relatively high price on a breakthrough product and then lowers it over time as demand declines
price skimming
It is a pricing strategy where the new product is initially offered at a low price to help a new product or service penetrate a large part of the market at an early stage and attract customers away from competitors
penetration pricing
