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Breakeven analysis
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An analysis to determine the sales volume required to
cover fixed and variable costs fully. Profit at the breakeven sales volume is zero.
cover fixed and variable costs fully. Profit at the breakeven sales volume is zero.
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business-to-business (B2B)
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A financial transaction, such as a sale, that takes place between businesses, such as between a manufacturer and wholesaler or between a wholesaler and a retailer.
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business-to-consumer (B2C)
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A financial transaction, such as a sale, that takes place between a company and consumers who are the end users of a product.
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Cost-Oriented Pricing
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called cost-plus pricing, a firm typically adds a percentage to the costs of production to arrive at the posted price.
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Demand Curve
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a graph of the relationship between the price of a good and the quantity demanded
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Dynamic Pricing
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An approach to pricing in which the posted price varies according to the current level of market demand.
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Experience Good
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a good that requires the customer to experience it in order to judge its value - Philip Nelson originated this concept.
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Marginal Math
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an analysis of the profitability of a price change based on the relative size of the unit margin
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Price experimentation
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The purposeful setting of price at varying levels across time, across geographic regions, and/or across channels to assess consumer response to the various prices.
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Price Sensitivity
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The degree to which an individual's willingness to purchase changes with a change in price.
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Search Good
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a good that you can easily evaluate before buying it. Philip Nelson originated this concept.
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Value-based pricing
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An approach to pricing in which the posted price is based on the value of a product as perceived by the customer.
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Yield-management System
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An approach to pricing in which the posted price is based on the expected demand for a given product by various customers. Typically applied to a perishable product, such as an airline seat or a hotel room, prices are adjusted by customer type, by the timing of the purchase, and/or by the date and time the product will be used.
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Value-Pricing Thermometer
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true economic value, perceived value, product price, cost of goods sold
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Cost of Goods Sold
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the total cost of merchandise sold during the period
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Perceived Value
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the relationship between a product's or service's benefits and its cost
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TEV
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Cost of the next-best alternative + value of the performance differential
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True Economic Value
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the value that a fully informed buyer would or should ascribe to the product
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value-pricing decision
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(1) the true economic value (TEV) of the product to the customer, (2) the perceived value (PV) of the product to that same customer, and (3) the organization's cost of goods sold (COGS).
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Value Orientation
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A focus on the economic value created by an organization's product for a given custome
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Marketing Mix
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Product, Price, Place, Promotion
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