question
Price:
answer
influences demand, perceptions of quality, and profitability for the firm
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How do customers perceive price?
answer
Reference Prices (External and Internal)
Competitors
Substitutes
Marketing Efforts
Competitors
Substitutes
Marketing Efforts
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The value sweet spot
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More than cost of goods sold, less than customer perceived value
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Fixed costs
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Costs that do not vary with the quantity of output produced
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Variable costs
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costs that vary with the quantity of output produced
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Unit contribution (surplus per unit)
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revenue per unit - variable costs per unit
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total contribution
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Contribution per unit x number of units sold
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profit
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total contribution - total costs
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price skimming
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a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion. Then lowered
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Price Penetration
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It sets a low initial price for a product in order to gain quick acceptance a segment of the market
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Four Pricing Approaches
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golden goose, value, cost plus, competitive
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