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price
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The amount of money exchanged for a good or service
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Customer value-based pricing
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setting price based on buyers' perceptions of value rather than on the seller's cost
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price floor
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no profits below this price
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price ceiling
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no demand above this price
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cost-based pricing
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design a good product > determine product costs > set price based on cost > convince Boyers of products' value
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value-based pricing
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assess customer needs and value perceptions > set target price to match customer perceived value > determine costs that can be insured, design product to deliver desired value at target price
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good-value pricing
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offering just the right combination of quality and good service a fair price
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value-added pricing
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attaching value-added features and services to differentiate a company's offers and charging higher prices
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cost-based pricing
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setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk
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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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variable costs
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costs that vary with the quantity of output produced
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total cost
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fixed costs plus variable costs
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experience curve (learning curve)
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the drop in the average per-unit production cost that comes with accumulated production experience
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Cost-plus pricing (markup pricing)
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adding a standard markup to the cost of the product
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Break-even pricing (target return pricing)
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setting price 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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setting prices based on competitors' strategies, prices, costs, and market offerings
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target costing
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pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
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price elasticity
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a measure of the sensitivity of demand to changes in price
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demand curve
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a curve that shows the relationship between the price of a product and the quantity of the product demanded
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