pricing strategies

Question 1

What is ‘Cost-Plus Pricing’?

Answer 1

A: Adding a mark-up to the cost of producing a product to ensure a profit is made.

Question 2

What is ‘Penetration Pricing’?

Answer 2

Setting a low price to gain market share quickly, then possibly raising it later.

Question 3

What is ‘Price Skimming’?

Answer 3

Charging a high price initially for a new or innovative product, then lowering it over time.

Question 4

What is ‘Predatory Pricing’?

Answer 4

Setting prices extremely low to force competitors out of the market (often illegal).

Question 5

What is ‘Competitive Pricing’?
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Answer 5

Setting prices based on what rivals are charging, often to remain competitive

Question 6

What is ‘Psychological Pricing’?

Answer 6

Using prices like £9.99 to make the product appear cheaper than it actually is.

Question 7

What is ‘Loss Leader Pricing’?

Answer 7

Selling a product below cost to attract customers, hoping they buy other profitable items.

Question 8

What is ‘Contribution Pricing’?

Answer 8

a method of setting prices that aim to cover variable costs and contribute towards covering fixed costs

Question 9

What is ‘Going Rate Pricing’?

Answer 9

A pricing strategy where a business sets its price in line with competitors or the market average.

Question 10

What is a ‘Price Taker’?

Answer 10

A business that has no control over the market price and must accept the going rate. Common in highly competitive markets.

Question 11

Q: What is a ‘Price Maker’?

Answer 11

A business that has the power to set its own prices, often due to strong brand, market share, or a lack of competition.