Markup VS Margin
This term is the amount added to the cost of a product to cover expenses and make a profit
What is markup?
Costs that change depending on how many units are sold
What are variable costs?
producing more units lowers this cost per unit
What is production cost?
This pricing mistake happens when companies slash prices simply because competitors do.
What is a price war?
This represents the percentage of the selling price that is NOT used to pay for the cost of the item
What is a margin?
Costs that stay constant regardless of production levels
What are fixed costs?
The process of spreading fixed costs over more units
What are ECONOMICS of scale?
When a cost or service isn't included in price, this occurs and profitability suffers.
What is lost value?
If a product costs $70 and sells for $100, this is the margin percentage.
What is 30%?
selling price minus variable cost
What is gross profit?
If widget production increases from 1 million to 2 million units, this type of cost stays the same.
What are fixed costs?
This pricing approach adds markup to cost, but may result in too high or too low prices.
What is cost-based pricing?
The amount of money left after all store expenses are paid.
What is profit?
The formula: fixed costs รท gross profit.
What is break-even point?
As production rises from 1 million to 3 million units, cost per widget falls from $1.00 to this amount.
What is $0.66?
Pricing based on what customers believe a product is worth.
What is value-based pricing?