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Customer value-based pricing strategy
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pricing strategy that uses buyers' perceptions of value as the key to pricing (good value does not equal low price)
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Good-value pricing
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one type of the customer value-based pricing strategy which offers just the right combination of quality and good service at a fair price (ex. less expensive versions of well-established products)
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Value-added pricing
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one type of the customer value-based pricing strategy which attaches features and services by adding and charging more (ex. movie theater services like 3D and dine-in service)
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Cost-based pricing strategy
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pricing strategy that sets prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk (variable, fixed, and total costs)
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Variable costs
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costs that vary directly with the level of production (ex. components, parts, packages, etc.)
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Fixed costs (overhead)
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costs that do not vary with production or sales level
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Total costs
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the sum of fixed and variable costs for any given level of production
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Cost-plus pricing
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one type of cost-based pricing strategy where a standard markup is added to the cost of the product (ex. $20 x .5 = $10 markup)
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Break-even pricing
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one type of cost-based pricing strategy where a price is set to break even on the costs of making and marketing a product or setting price to make a target return
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Competition-based pricing
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pricing strategy that sets a price based on competitors' strategies, prices, costs, and market offerings (which is more expensive vs. more reliable, has longer warranties, etc.)
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