Price
The amount of money requested or exchanged for a product.
Price
the amount of revenue left after subtracting costs
related to producing a product.
Gross Profit
is the quantity of goods available for purchase.
Supply
product demand that is affected by a change in price.
Elastic demand
• an amount paid on a regular basis related to the
operation of a business.
• a cost that changes based on factors related
to producing and selling a product.
• A fixed expense
• A variable expense
What is the easiest P to change?
Price
sometimes called net income, is the amount left after
subtracting a company’s operating expenses from revenue.
Net Profit
is the quantity of goods that consumers want to purchase.
Demand
product demand that is not affected by price.
Inelastic demand
Does Competition Pricing take account of how much the product costs for the business? Does this pricing method always lead to profit?
1. No
2. No
What are the two distinct Pricing objectives?
• Maximize sales
• Maximize profits
is the point at which revenue from sales equals
costs.
Break-even point
is the point at which the supply equals the demand for a product.
Equilibrium
the added satisfaction gained by using one additional unit of the same product.
Marginal utility
How does the price change during the product lifecycle?
Introduction- Skimming or penetrating
Growth- Keep penetrating or transition from skimming to penetrating
Maturity and decline- Price is lowered to extend life of product
Two ways businesses can maximize sales
• Market share is the percentage of total sales in a market held by one
business.
• Volume pricing is lowering the price of a product based on a higher
number of units purchased at the same time.
When does a product start making profit?
Demand-based pricing is a pricing strategy based on the amount customers are willing to pay is also referred to as.
Value-based pricing
states that consuming more units of the same product decreases the marginal utility from each additional unit.
The law of diminishing marginal utility
What are the 3 types of quality that influence customer perception?
Premium, Moderate, Value
What are the 3 goals of pricing?
Must cover the costs of producing and selling the product
• Should generate the desired level of profit for the business
• Must be what customers are willing to pay for the product
What is the formula for break-even point?
(cost × number of units)/
selling price = break-even point
the degree to which price changes demand.
Demand elasticity
Describe elastic and inelastic demand in application.
Elastic demand is product demand that is affected by a change in price.
• When prices are raised, demand will drop.
• When prices are lowered, demand rises.
Inelastic demand is product demand that is not affected by price.
• Demand for necessities, such as basic food products, is inelastic.
• Brand loyalty can create inelastic demand.
What are the 4 mark-up methods discussed?
Keystone, Dollar, Precent, Cost based