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Price
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The amount of money charged fora product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service.
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Customer Value-Based Pricing
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Setting price based on buyers perception of the value rather than on the sellers cost.
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Good-Value Pricing
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Offering just the right combination of quality and good service at 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 directly with the level of production.
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Total Costs
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Sum of fixed and variable costs for any given level of production.
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Experience Curve (learning curve)
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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, pricing, 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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Demand Curve
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Curve that shows the number of units the market will buy in a given time period, at different prices that might be charged.
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Price Elasticity
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A measure of the sensitivity of demand to changing prices.
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