| A | B |
|---|
| Price | that which is given up in an exchange to acquire a good or service |
| revenue | the price charged to customers multiplied by the number of units sold |
| profit | revenue-expenses; or the amount added of the break even cost |
| Reasonable price | perceived reasonable value at the time of the transaction |
| Barter | Goods or services are exchanged for other goods or services |
| Price Strategy | a basic, long-term pricing framework, which establishes the initial price for a product and the intended direction for price movements over the product life cycle |
| Price skimming "market-plus" approach | a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotino |
| Penetration Pricing | A pricing policy whereby a firm charges a relatively low price for a product initially as a way to reach the mass market |
| Status Quo Pricing | Charging a price close to current price or close to competition. Can also be used for traditional prices like the price of a candy bar has remained fairly static |
| unfair trade practice acts | laws that prohibit wholesalers and retailers from selling below cost |
| Price Fixing | an agreement between two or more firms on the price they will charge for a product (Illegal under the Sherman and Federal Trade Commission Act) |
| Robinson-Patman Act of 1936 | prohibits any firm from selling to two or more different buyers, within a reasonably short time, commodities of like grade and quality at different prices where the result would substantially reduce competition (A firm's defenses against this may include: Cost, market conditions and competition) |
| predatory pricing | the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market |
| Base Price | the general price level at which the company expects to sell the good or service |
| quantity discount | a price reduction offered to buyers buying in multiple units or above a specified dollar amount |
| cumulative quantity discount | a deduction from list price that applies to the buyer's total purchases made during a specific period |
| noncumulative quantity discount | a deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period |
| cash discount | a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill |
| function discount (trade discount) | a discount to wholesalers and retailers for performing channel functions |
| seasonal discount | a price reduction for buying merchandise out of season |
| promotional allowance (trade allowance) | a payment to a dealer for promoting the manufacturer's products |
| rebate | a cash refund given for the purchase of a product during a specific period |
| value-based pricing | setting the price at a level that seems to the customer to be a good price compared to the prices of other companies |
| single-price tactic | a price tactic that offers all goods and services at the same price (or perhaps two or three prices) |
| flexible pricing (variable pricing) | a price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities |
| Professional Services Pricing | used by people with lengthy experience, training, and often certification by a licensing board such as doctors and lawyers. They are ethically bound to charge the fair amount |
| Price lining | the practice of offering a product line with several items at specific price points |
| Leader pricing (loss-leader pricing) | a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in store |
| Bait pricing | a price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise |
| Odd-Even Pricing | Odd number .99 = bargain; even number = quality |
| price bundling | marketing two or more products in a single package for a special price |
| unbundling | reducing the bundle of services that comes with the basic product |
| Two-Part Pricing | a price tactic that charges two separate amounts to consume a single good or service |
| Consumer penalty | An extra fee paid by the consumer for violating the terms of the purchase agreement |
| Mark-Ups | For a retailer, amount added above the purchasing cost to cover expenses AND profit |
| Keystoning | The practice of marking up price by 100%, or doubling the cost |
| Demand | the quantity of a product that will be sold in the market at various prices for a specified period. |
| Elasticity of Demand | Consumers' responsiveness or sensitivity to changes in price |
| Incremental Costing | Covering only your variable costs and some, but not all, of the allocated portion of fixed costs. Generally appropriate when you have excess capacity or you have no better offer/opportunity. Should only be used in the short term |
| Elasticity Equation | % Change in Quantity/ % change in price |
| Assumptions about a demand curve | Consumer income, tastes, and available substitutes do not change |
| Psychological Price Point | the price "limit" for most consumers; the price at which the majority of consumers drop out of the market |
| Yield Management System | a technique for adjusting prices frequently based upon short term changes in demand and price elasticity. (Coke's vending machines that have wirelessly changed prices) |
