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| The fixed cost per unit produced. |
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| An illegal marketing practice in which an advertising price special is used as bait to get customers into the store with the intention of switching them to a higher priced product. |
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| A pricing tactic in which customers pay shipping charges from set basing-point geographical locations, whether the goods are actually shipped from these points or not. |
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| A method for determining the number of units that a firm must produce and sell at a given price to cover all its costs. |
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| The point at which the total revenue and total costs are equal and beyond which the company makes a profit; below that point, the firm will suffer a loss. |
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| A pricing tactic for two items that must be used together; one item is priced very low, and the firm makes its profit on another, high-margin item essential to the operation of the first item (HP ink-jet cartridges, Sony R |
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| The contribution from each sale to fixed costs and profits. The difference between the price the firm charges for a product and the variable costs. |
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| A method of setting prices in which the seller totals all the costs for the product and then adds the amount to arrive at the selling price. |
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| Cross-elasticity of demand |
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Definition
| When changes in the price of one product affect the demand for another item. For ex: when sales of gelatto or sherbert go down, the sales of ice-cream fall as well. |
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| A price-setting method based on estimates of demand at different prices. |
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| A pricing strategy in which the price can easily be adjusted to meet changes in the marketplace. |
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| Demand in which changes in price have large effects on the amount demanded. |
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| A pricing tactic in which the cost of loading and transporting the product to the customer is included in the selling price and is paid by the manufacturer. (Product is deliverd) |
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| A pricing tactic in which the cost of transporting the product from the factory to the customer’s location is the responsibility of the customer. (You pick it up) |
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Definition
| Costs of production that do not change with the number of units produced. |
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| Freight absorption pricing |
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Definition
| A pricing tactic in which the seller absorbs the total cost of transportation. |
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| Demand in which changes in price have little or no effect on the amount demanded. |
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| A set price or a price range in consumers’ minds that they refer to in evaluating a product’s price. |
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| The price the end customer is expected to pay as determined by the manufacturer; also referred to as the suggested retail price. |
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| The pricing policy of setting prices very low or even below cost to attract customers into a store. |
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| A method that uses cost and demand to identify the price that will maximize profits. |
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Definition
| The increase in total cost that results from producing one additional unit of a product. |
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Definition
| The increase in total income or revenue that results from selling one additional unit of a product. |
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| E-commerce that allows shoppers to purchase products through online bidding. |
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| A pricing strategy in which a firm introduces a new product at a very low price to encourage more customers to purchase it. |
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Definition
| Illegal pricing strategy in which a company sets a very low price for the purpose of driving competitors out of business. |
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| Products that have a high price and that appeal to status-conscious consumers. |
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| The assignment of value, or the amount the consumer must exchange to receive the offering. |
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| Selling two or more goods or services as a single package for one price. |
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| Price elasticity of demand |
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Definition
| The percentage change in unit sales that results from a percentage change in price. |
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Definition
| The collaboration of two or more firms in setting prices, usually to keep prices high. Airlines used to do this much more. |
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| A pricing strategy in which one firm first sets its price and other firms in the industry follow with the same or vary similar prices. |
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| The practice of setting a limited number of different specific prices, called price points, for items in a product line. |
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| A pricing discount of charging reduced prices for purchases of larger quantities of a product. |
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| A very high, premium price that a firm charges for its new, highly desirable product. |
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| A process in which firms identify the quality and functionality needed to satisfy customers and what price they are willing to pay before the product is designed; the product is manufactured only if the firm can control costs to meet the required price. |
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Definition
| The total of the fixed costs and the variable costs for a set number of units produced. |
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| Trade or functional discounts |
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Definition
| Discounts off list price of products to members of the channel of distribution who perform various marketing functions. |
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Definition
| Pricing a new product low for a limited period of time in order to lower the risk for a customer. |
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Definition
| State laws that prohibit suppliers from selling products below cost to protect small businesses from larger competitors. |
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| Uniform delivered pricing |
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Definition
| A pricing tactic in which a firm adds a standard shipping price to the price for all customers regardless of the location. |
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| Value pricing or everyday low pricing (EDLP) |
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Definition
| A pricing strategy in which a firm sets prices that provide ultimate value to customers. |
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Definition
| The cost of production (raw and processed materials, parts, and labor) that are tied to and vary depending on the number of units produced. |
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Definition
| A practice of charging different prices to different customers in order to manage capacity while maximizing revenues. |
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