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Definition
| The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service |
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| Customer value-based pricing |
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Definition
| Setting price based on buyers' perceptions of value rather than on the seller's cost. |
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| Offering the right combination of quality and good service at a fair price. |
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Definition
| Attaching value-added features and services to differentiate a company's offers while charging higher prices. |
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Definition
| Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk |
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Definition
| Costs that do not vary with production or sales level |
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| Costs that vary directly with the level of production |
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Definition
| The sum of the fixed and variable costs for any given level of production |
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| Cost-plus pricing (markup price) |
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Definition
| Adding a standard markup to the cost of the product |
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Definition
| Setting price to break even on the costs of making and marketing a product, or setting price to make a target return |
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| Competition-based pricing |
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Definition
| Setting prices based on competitors' strategies, prices, costs, and market offerings. |
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Definition
| Pricing that starts with an ideal selling price and then targets costs that will ensure that the price is met. |
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Definition
| A curve that shows the number of units the market will buy in a given time period, at different prices that might be charged |
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Term
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Definition
| A measure of the sensitivity of demand to changes in price. |
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Term
| Market-skimming pricing (or price skimming) |
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Definition
| Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales. |
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| Market-penetration pricing |
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Definition
| Setting a low price for a new product to attract a large number of buyers and a large market share |
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Term
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Definition
| Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors' prices |
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Definition
| The pricing of optional or accessory products along with a main product |
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Definition
| Setting a price for products that must be used along with a main product, such as blades for a razor and games for a video game console |
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Definition
| Setting a price for by-products to make the main product's price more competitive |
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Definition
| Combining several products and offering the bundle at a reduced price |
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Definition
| A straight reduction in price on purchases made during a stated period of time or in larger quantities |
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Term
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Definition
| A reduction from the list price for buyer actions such as trade-ins or promotional and sales support |
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Term
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Definition
| Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs |
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Definition
| Pricing that considers the psychology of prices, not simply the economics; the price says something about the product |
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Definition
| Prices that buyers carry in their minds and refer to when they look at a given product. |
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Definition
| Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales |
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Term
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Definition
| Adjusting prices continually to meet the characteristics and needs of individual customers and situations |
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