Pricing Considerations and Strategies - terms

marketing fundamentals -- part 9 -- terms

price -- the amount of money charged for product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service
dynamic pricing -- charging different prices depending on individual customers and situations
target costing -- pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
fixed costs -- costs that do not very with production or sales levels
variable costs -- costs that vary directly with the level of production
total costs -- the sum of the fixed and variable costs for any given level of production
demand curve -- a curve that shows the number of units the market will buy in the given time period at different prices that might be charged
price elasticity -- a measure of the sensitivity of demand to changes in price
cost-plus pricing -- adding a standard markup to the cost of the product
break-even pricing (target profit pricing) -- setting price to break even on the costs of making and marketing a product; or setting price to make a target profit
value-based pricing -- setting price based on buyers perceptions of value rather than on the seller's costs
value pricing -- offering just the right combination of quality and good service at a fair price
competition-based pricing -- setting prices based on the prices that competitors charge for similar products
market-skimming pricing -- setting a high price for a new product to skim maximum revenues nearby layer from the segments willing to pay the high price: the company makes fewer but more profitable sales
market-penetration pricing -- setting a low price for a new product in order to attract a large number of buyers and large market share
product line pricing -- 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
optional-product pricing -- the pricing of optional or accessory products along with a main product
captive-product pricing -- setting a price for products that must be used along with a main product, such as blades for a razor and film for camera
By-product pricing -- setting a price for by-products in order to make the main products price more competitive
products bundle pricing -- combining several products and offering the bundle at a reduced price
discount -- a straight reduction in prices on purchases during a stated period of time
allowance -- promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturers product in some way
segmented pricing -- selling a product or service at two or more prices, where the difference in prices is not based on differences in costs
psychological pricing -- a pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product
reference prices -- prices that buyers carry in their minds and refer to when looking for a given product
promotional pricing -- temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales