Pricing Basics
The amount of money a customer pays for a product or service.
What is price?
A pricing strategy where a company starts with a low price to attract customers and raise it later.
What is penetration pricing?
This fast-food chain is known for its "Dollar Menu."
What is McDonald's?
When more people want a product, businesses raise the price.
What is demand?
A type of pricing that makes products seem cheaper by setting them at $4.99 instead of $5.00.
What is charm pricing?
The total cost of making a product, including materials and labor.
What is the cost of goods sold (COGS)?
A strategy that sets prices based on competitors' prices.
What is competitive pricing?
Apple often starts with high prices for new iPhones and lowers them over time.
What is price skimming?
A business lowers its price because a new competitor offers a similar product.
What is competition?
The term for when businesses bundle products together for a single price, like a meal deal at a fast-food restaurant.
What is bundle pricing?
When businesses consider competition, costs, and consumer demand to set prices.
What is pricing strategy?
A high price set at first to maximize profits before lowering it over time.
What is price skimming?
Gasoline prices change daily based on supply and demand.
What is dynamic pricing?
When the cost of materials increases, companies increase prices.
What is cost of production?
A pricing strategy where businesses charge different prices for the same product, like airline tickets.
What is variable pricing?
The strategy where a business sets a price based on how much it costs to produce plus a markup.
What is cost-plus pricing?
A strategy that makes a price look lower by setting it at $9.99 instead of $10.00.
What is psychological pricing?
This online store uses algorithms to change prices based on customer behavior and demand.
What is Amazon?
This factor makes prices drop after the holidays, like Christmas decorations in January.
What is seasonality?
The term for when a company offers a super high-priced version of a product just to make the regular version seem like a better deal.
What is decoy pricing?
The pricing method where businesses change prices based on time, demand, or season.
What is dynamic pricing?
A business charges higher prices for a product to give it an exclusive or luxury feel.
What is premium pricing?
This theme park uses surge pricing, meaning tickets cost more on weekends and holidays.
What is Disney World?
When a company reduces prices to clear out inventory.
What is clearance pricing?
The country known for having some of the highest prices for luxury brands like Gucci and Louis Vuitton.
What is Switzerland?